This article presents the top 10 blue-chip stocks that offer dividends. With concerns over inflation, investors are becoming more cautious. According to BofA analyst Ethan Harris, there is a 40% chance of a recession in the coming year, with economic growth expected to slow in the latter half of 2023. Deutsche Bank predicts an early recession and modest 0.5% growth in 2023.
In the face of economic uncertainty and the 2022 tech market sell-off, investors are shifting their attention to dividend-paying blue-chip stocks over high-growth tech stocks. Exxon Mobil Corporation (NYSE: XOM), PepsiCo, Inc. (NASDAQ: PEP), and The Procter & Gamble Company (NYSE: PG) are particularly attractive to investors due to their consistent dividend payments.
During times of economic instability, dividend-paying stocks tend to outperform their competitors. Fidelity’s analysis shows that high dividend payers outperformed the market during the last two bear markets. Additionally, dividends accounted for half of the S&P 500’s gains over the past 30 years.
Investing in blue-chip stocks that pay dividends is a popular strategy among investors, especially during times of economic uncertainty. In this post, we’ll share the 10 best blue-chip stocks with dividends to consider buying now, along with answers to some commonly asked questions.
If you’re new to investing in blue-chip stocks, we recommend doing some research to choose the right stocks for your portfolio. Once you’ve made your decision, you can follow these steps to invest:
- Open a brokerage account with a reputable firm.
- Fund your account with cash or securities.
- Research the blue-chip stocks with dividends you’re interested in buying.
- Place your buy order through your brokerage platform.
Some of the best blue-chip stocks with dividends to consider include Exxon Mobil Corporation (NYSE: XOM), PepsiCo, Inc. (NASDAQ: PEP), and The Procter & Gamble Company (NYSE: PG), among others. These stocks have a history of paying dividends to shareholders, which can provide steady income and help protect against market volatility.
When considering blue-chip stocks with dividends, it’s important to look beyond just the dividend yield. Consider factors such as the company’s financial health, growth prospects, and overall market conditions. And as with any investment, it’s important to do your own research and consult with a financial advisor if necessary.
Investing in blue-chip stocks with dividends can be a smart long-term strategy for building wealth. By following these steps and conducting thorough research, you can make informed investment decisions that align with your financial goals.
How To Invest In Blue-Chip Stocks With Dividends
1. Buy individual company shares
Investing in blue-chip stocks is a popular option for many traders, and most trading platforms offer access to shares in both UK and foreign blue-chip businesses. However, there are some key factors to consider when investing in blue-chip stocks:
- Trading volumes: Blue chip firms generally have high trading volumes, which means buying and selling shares can be easier than with smaller firms.
- Buy-sell spread: The strong liquidity of blue-chip stocks typically results in a lower buy-sell spread. For example, FTSE 100 Barclays has a buy-sell price difference of 0.02%, while smaller-cap Topps Tiles has a difference of almost 4%. This means that Topps Tiles’ share price must grow by 4% just to break even.
- High share price: Some blue-chip stocks have high share prices, which can make it harder to make minor investments. For instance, Berkshire Hathaway’s share price of £360,000 is much higher than AstraZeneca’s £108 per share. However, some trading platforms offer fractional share ownership or share splitting to reduce share prices.
- Dealing fees: Most trading platforms charge fees of £5-10 for each share transaction. Some also require annual platform fees for holding shares. Additionally, buying non-UK shares may incur a foreign exchange cost of 0.5-1.5%. Foreign exchange fluctuations can also impact the value of sterling investments.
Considering these factors can help traders make informed decisions when investing in blue-chip stocks.
2. Buy Blue Chips Indirectly
Investors can gain from a portfolio of blue-chip stocks without the risk of depending on a single business by choosing one of the two options below:
- Index or tracker funds: These are exchange-traded funds that replicate an index containing a high percentage of blue-chip businesses, such as the FTSE 100 or S&P 500. Algorithms passively manage these funds, and the yearly management charge is only 0.1-0.25%.
- Actively-managed funds: These funds, such as the Vanguard US Growth and Fidelity Blue Chip Growth Funds, invest in large-cap blue-chip stocks. While actively managed funds charge 0.5-1.0% yearly management fees, the potential returns may be greater
10 Best Blue-Chip Stocks With Dividends To Buy Now
For this list, we have chosen reputable and established companies with a proven track record of paying reliable dividends. These companies have also consistently exhibited significant financial stability over a long period, making them promising investment opportunities in the current economic environment. The rankings of these stocks are based on their yields.
1. UnitedHealth Group Incorporated (NYSE: UNH)
As of August 26, UnitedHealth Group Incorporated (NYSE: UNH) has a dividend yield of 1.22%. The company provides insurance and medical services to consumers, and it recently announced a quarterly dividend of $1.65 per share, continuing a 12-year trend of dividend increases. UNH has increased its distribution by 130% over the past five years.
In 2022, UNH reported sales of $80.3 billion, up 13% from the prior quarter. The company’s operating earnings rose 19% annually to $7.1 billion, and operations yielded $6.9 billion. UNH has invested $4 billion in dividends and share repurchases.
Mizuho raised its price target for UNH to $600 in August and maintained a Buy rating based on the company’s better business outlook. As of the second quarter, 91 hedge funds in Insider Monkey’s database owned UNH, down from 103, with total interests of $11 billion. In uncertain economic times, UNH could be a reliable blue-chip dividend firm to consider.
2. Accenture plc (NYSE: ACN)
The dividend yield stood at 1.25% as of August 26.
Accenture plc (NYSE: ACN), an IT consulting firm based in Ireland and the United States, provides consultancy and related services. In August, Baird raised the company’s price target to $338, citing its acquisition of a software firm headquartered in Indonesia as a possible source of increased annualized revenue.
For fiscal year 2022, Accenture plc (NYSE: ACN) reported new bookings of $17 billion, the second-highest ever for the company. Quarterly revenue increased by 21.9% YoY to $16.16 billion, with operating income increasing by 23% to $2.6 billion from the previous year.
As of August 26, Accenture plc (NYSE: ACN) paid a quarterly dividend of $0.97 per share, resulting in a dividend yield of 1.25%. The company has raised its dividend for the past 16 years and paid $614 million in Q3 of fiscal year 2022 to shareholders.
Insider Monkey’s 2022 database indicates that 61 hedge funds held positions in Accenture plc (NYSE: ACN), with a total value of more than $3.1 billion, down from 63 in the previous quarter.
3. American Express Company (NYSE: AXP)
As of August 26th, American Express Company (NYSE: AXP) has a dividend yield of 1.28%. The global credit card service provider is held in 67 hedge fund portfolios, with investments totaling over $25.2 billion. Berkshire Hathaway is the company’s largest shareholder, holding approximately $21 billion in shares.
In Q2 of 2022, American Express Company (NYSE: AXP) reported a year-over-year increase of 30.9% in sales, reaching $13.4 billion. This growth was driven by a rise in cardholder spending compared to the same period last year. The business projects sales growth of 23% to 25% for FY22.
American Express Company (NYSE: AXP) raised its quarterly dividend by 20% in March to $0.52 per share. The company has consistently paid dividends for the past 30 years. As of August 26th, the stock’s dividend yield stood at 1.28%.
In July, RBC Capital raised its price target on American Express Company (NYSE: AXP) to $180, while maintaining the shares’ Sector Perform rating. The company’s strong billing activity and expanding revenue were cited as reasons for the increase.
4. NextEra Energy, Inc. (NYSE: NEE)
NextEra Energy, Inc. (NYSE: NEE), a prominent American energy services provider, experienced strong performance in 2022, reporting $5.1 billion in revenue, a 31.8% increase from the prior year. The company also generated $2.8 billion in operating cash flow during the current quarter, compared to $1.9 billion in the previous quarter, and had $606 million in free cash flow and $629 million in cash and cash equivalents.
NextEra Energy, Inc. (NYSE: NEE) has consistently increased its dividends for 28 years, with a quarterly distribution of $0.425 per share and a dividend yield of 1.90% as of August 26.
Fisher Asset Management became the company’s top shareholder in 2022, holding over $1.2 billion in stakes. In addition, according to Insider Monkey’s database, 59 hedge funds with approximately $2.76 billion holdings held positions in NextEra Energy, Inc. (NYSE: NEE). In August, Morgan Stanley raised its price target on NextEra Energy, Inc. to $94 with an Equal Weight rating, and also boosted its growth rate projections for clean energy equities.
5. McDonald’s Corporation (NYSE: MCD)
A dividend yield of 2.10% as of August 26.
McDonald’s Corporation (NYSE: MCD) is a multinational American fast food company that operates globally as a significant retailer of food service products.
BMO Capital increased its price target on McDonald’s stock in August, citing the company’s rapid growth following the pandemic. With an Outperform rating, the target price was raised to $300.
In 2022, McDonald’s Corporation (NYSE: MCD) reported a 9.7% increase in global comparable sales, with growth in all business segments. Sales for the company rose by 4%, with digital sales in its top six regions for the quarter surpassing $6 billion.
McDonald’s Corporation (NYSE: MCD) has a history of raising dividends for 46 consecutive years. As of August 26, the quarterly dividend was $1.38 per share, with a dividend yield of 2.10%. MCD could be an excellent dividend investment choice, along with Exxon Mobil Corporation (NYSE: XOM), PepsiCo, Inc. (NASDAQ: PEP), and Procter & Gamble Company (NYSE: PG).
As of the end of 2022, 50 hedge funds tracked by Insider Monkey owned McDonald’s Corporation (NYSE: MCD), down from 58 in the previous quarter. These funds’ holdings in the company are worth over $2.3 billion.
6. The Hanover Insurance Group (NYSE: THG)
2.24% was the dividend yield as of August 26.
The Hanover Insurance Group, Inc. (NYSE: THG) offers insurance services for businesses, homes, and vehicles. Morgan Stanley initiated coverage on the stock in June with an Equal Weight rating and a price target of $155, citing the company’s strong financials in the current economic climate.
As of June, The Hanover Insurance Group, Inc. (NYSE: THG) had over $9.6 billion in cash and investment assets and approximately $146 million in cash and cash equivalents.
In the second quarter of 2022, the company’s revenue increased by 9.9% year over year to $1.33 billion. The Hanover Insurance Group, Inc. (NYSE: THG) has consistently raised its dividends for 17 years, with a dividend yield of 2.24% as of August 26 and a quarterly dividend of $0.75 per share.
According to Insider Monkey’s 2022 database, 15 hedge funds have interests in The Hanover Insurance Group, Inc. (NYSE: THG), worth close to $64 million. In the previous quarter, 21 hedge funds held over $97.4 million worth of interests in the insurance company.
7. Hormel Foods Corporation (NYSE: HRL)
Hormel Foods Corporation (NYSE: HRL) is a US-based food processing company that specializes in the packaging and marketing of various food products. The company’s impressive performance was evident in its $3.1 billion revenue, an 18.8% annual growth rate, and a 24% increase in operating cash flow to $193 million. Hormel Foods Corporation also had $861.7 million in cash and cash equivalents at the end of the quarter.
Hormel Foods Corporation has increased its quarterly dividend by 6% to $0.26 per share, extending its 56-year run of raising dividends. As of August 26, the company’s dividend yield was 2.02%.
In August, Stephens presented a positive outlook for Hormel Foods Corporation, emphasizing the company’s underlying growth. The company maintained its Equal Weight rating and raised its price objective to $55.
At the end of 2022, 27 hedge funds held Hormel Foods Corporation in Insider Monkey’s database, with investments totaling over $434.5 million, down from 30 in the previous quarter. Renaissance Technologies was the top shareholder with 3 million shares
8. Sonoco Products Company (NYSE: SON)
2.98% was the dividend yield as of August 26.
Sonoco Products Company (NYSE: SON) is a global supplier of industrial and consumer packaging goods based in South Carolina. In 2022, the company reported revenue of $1.91 billion, a 38.4% increase from the previous year. During the first half of 2022, Sonoco’s cash flow totaled $184.5 million, with free cash flow increasing to $40.3 million. As of June, the company paid out $91.5 million in dividends.
Sonoco Products Company (NYSE: SON) has a dividend yield of 2.98% as of August 26 and has raised its dividends for 38 consecutive years, making it one of the longest dividend-paying companies in the packaging industry.
According to Insider Monkey’s data, Sonoco Products Company (NYSE: SON) was a favorite stock among hedge funds in 2022, with 22 funds holding interests worth around $187 million. This number is up from 17 funds in the previous quarter.
In July, Citigroup initiated coverage of Sonoco Products Company (NYSE: SON) with a Buy rating and a $66 price target. The company has been increasing its exposure to more defensive consumer markets.
9. State Street Corporation (NYSE: STT)
As of August 26, the dividend yield was 3.52%.
State Street Corporation (NYSE: STT), a pioneer in financial services with its headquarters in Boston, has maintained its dividend payment for 24 years and a 12-year dividend growth streak. As of August 26, it offered a dividend yield of 3.52%, with a quarterly dividend of $0.63 per share.
In Q2 2022, State Street Corporation (NYSE: STT) reported a 25% surge in net interest income due to higher loan levels, and after the quarter, it continued to receive cash inflows with AUM exceeding $3.5 trillion. The company paid $210 million in quarterly dividends.
Deutsche Bank raised its price objective to $74 while maintaining a Hold rating based on State Street Corporation’s (NYSE: STT) fundamental strength.
Insider Monkey’s data showed that hedge fund positions in State Street Corporation (NYSE: STT) rose from 29 to 41 in 2022, with assets surpassing $667.6 million. Over 6 million shares were owned by Harris Associates, based in Boston.
10. Lincoln National Corporation (NYSE: LNC)
3.63% was the dividend yield as of August 26.
Lincoln National Corporation (NYSE: LNC) is an American insurance provider offering a variety of insurance and investment management services through its subsidiaries. In 2022, 34 elite funds have increased their positions in the company, up from 25 in the previous quarter, with a combined stake worth $451.4 million.
JPMorgan gave Lincoln National Corporation (NYSE: LNC) an Overweight rating with a price target of $77, citing the company’s ability to handle rising premiums and decreasing Covid cases.
Lincoln National Corporation (NYSE: LNC) pays a quarterly dividend of $0.45 per share, with a dividend yield of 3.63%. It has consistently raised its dividends for 11 consecutive years.