In this article, we discuss the 10 blue-chip stocks with dividends. You can skip our comprehensive analysis of these blue-chip stocks which pay dividends, and go directly to 5 Blue Chip Stocks with Dividends.
Blue-chip stocks are companies that have been in business for decades and are giants in their respective industries. Their market caps are in the hundreds of billions, and in the cases of Microsoft Corporation (NASDAQ:MSFT), Apple Inc. (NASDAQ:AAPL), and Amazon.com, Inc. (NASDAQ:AMZN), exceed the trillion-dollar mark. Blue-chip companies have business structures that are diversified across various segments and geographical locations, making their stocks less sensitive to economic turbulence.
The large-cap index S&P 500, which includes all the blue-chip stocks, performed better in comparison to the mid-cap index S&P MidCap 400, and the S&P SmallCap 600 index for small-cap firms in 4 years between 2009-2017. The S&P SmallCap 600 index led the year in performance on 3 occasions, while the S&P MidCap 400 ranked first in 2 separate years. This shows that even though blue-chip names offer relatively modest growth in return for stable business models, they still have the potential to offer the most growth when compared to companies with smaller sizes and often higher growth potential.
A majority of blue-chip stocks offer dividends to shareholders, and these payouts are supported by robust and sustainable business models. Overall dividend payments around the globe in 2021 recorded a 14.7% increase in underlying growth to come in at $1.47 trillion, and this figure is expected to reach $1.52 trillion in 2022, according to a report by the Janus Henderson Global Dividend Index. Investors would be wise to take advantage of blue-chip companies that offer ever-increasing dividends, in order to shield their portfolios from the investment risk that comes with the current economic climate. Some of the best dividend-paying blue chip stocks include Johnson & Johnson (NYSE:JNJ), Broadcom Inc. (NASDAQ:AVGO), and The Coca-Cola Company (NYSE:KO) along with others mentioned below.
Our Methodology
We chose blue-chip stocks that offer dividend payments to shareholders and ranked them according to the number of hedge funds bullish on the company shares. Hedge fund sentiment around each stock has been derived from Insider Monkey's database of 924 elite hedge funds.
10 Blue Chip Stocks with Dividends
10. Walgreens Boots Alliance, Inc. (NASDAQ:WBA)
Number of Hedge Fund Holders: 42Dividend Yield (as of March 18): 4.03%
Walgreens Boots Alliance, Inc. (NASDAQ:WBA) operates as a drug retail company in the United States. The firm has paid a dividend to shareholders for the last 30 years and declared a quarterly dividend of $0.4775 per share on January 27, in line with the previous. As of March 18, Walgreens Boots Alliance, Inc. (NASDAQ:WBA) offers a dividend yield of 4.03%.
Walgreens Boots Alliance, Inc. (NASDAQ:WBA) posted an EPS of $1.68 in the fourth quarter, exceeding analysts' forecasts by $0.34. The fourth-quarter revenue was recorded at $33.90 billion, which outperformed analysts' estimates by $946.75 million.
Walgreens Boots Alliance, Inc. (NASDAQ:WBA) announced in March that it had partnered with the U.S. Department of Health and Human Services, and Labcorp (NYSE:LH) in a bid to provide free Covid at-home testing kits to needy individuals throughout the United States. On January 10, Mizuho analyst Ann Hynes reiterated a 'Neutral' rating on Walgreens Boots Alliance, Inc. (NASDAQ:WBA) shares, and raised the price target to $56 from $51. The analyst cited an increased outlook of COVID testing and vaccine benefits for the increase in price target.
42 hedge funds were long Walgreens Boots Alliance, Inc. (NASDAQ:WBA) shares in the fourth quarter, in contrast to 37 hedge funds in the preceding quarter. Camber Capital Management was the top shareholder in Walgreens Boots Alliance, Inc. (NASDAQ:WBA) in the fourth quarter with 3.5 million shares valued at $182.56 million.
Miller Howard Investments talked about Walgreens Boots Alliance, Inc. (NASDAQ:WBA) in its Q3 2021 investor letter. The fund said:
"While optimistic about a recovery, we continue to balance our cyclical holdings with dividend-payers in stable, less economically-sensitive industries. We took a position in Walgreens (WBA) based on its low valuation, high dividend yield, and stable business model."
In addition to Johnson & Johnson (NYSE:JNJ), Broadcom Inc. (NASDAQ:AVGO), and The Coca-Cola Company (NYSE:KO), Walgreens Boots Alliance, Inc. (NASDAQ:WBA) is a top blue-chip stock that pays dividends.
9. International Business Machines Corporation (NYSE:IBM)
Number of Hedge Fund Holders: 44Dividend Yield (as of March 18): 5.09%
International Business Machines Corporation (NYSE:IBM) is a tech firm based in New York which offers a range of software, hardware, and infrastructure solutions. The dividend aristocrat has raised its yield for 26 years in a row and offers an impressive dividend of 5.09% as of March 18.
On February 15, International Business Machines Corporation (NYSE:IBM) announced the acquisition of Neudesic, a US-based cloud services consultancy firm that specializes primarily in the Microsoft (MSFT) Azure platform, as well as technical expertise in multi-cloud services. This deal will expand IBM's portfolio of multi-cloud services and further advance the company's hybrid cloud and AI strategy.
On January 25, BMO Capital analyst Keith Bachman kept a 'Market Perform' rating on International Business Machines Corporation (NYSE:IBM) shares, and raised the price target to $155 from $153, appreciating the firm's Q4 earnings results. IBM posted an EPS of $3.35 in the fourth quarter, beating estimates by $0.06. Quarterly revenue of $16.7 billion was above analysts' expectations by $730.50 million.
44 hedge funds were seen holding stakes in International Business Machines Corporation (NYSE:IBM) at the end of the fourth quarter, with a combined value of $1.29 billion. This shows improving investor confidence in the tech firm over the previous quarter where 41 hedge funds were long on the company shares. Arrowstreet Capital was the leading shareholder of International Business Machines Corporation (NYSE:IBM) in Q4 2021, with 3.29 million shares of $440.57 million. The fund increased its holding in the tech giant by 22% over the previous quarter.
St. James Investment Company discussed International Business Machines Corporation (NYSE:IBM) in its Q4 2021 investor letter, stating:
"IBM was not the first company to build computers. The distinction belongs to Sperry-Rand's subsidiary UNIVAC, which introduced the first commercially successful computers in the early 1950s. In this era, IBM did possess the largest research and development department of the business machines industry and quickly caught up, introducing cost-competitive computers a few years after UNIVAC. By the late 1950s, IBM held the dominant market share in computers. IBM also touted a vastly superior sales organization, which used a sales tactic called "paper machines" (the equivalent of today's "vaporware"). If a competitor's product was selling well in a market segment that IBM had yet to penetrate, the company would announce a competing product and start taking orders for the "paper machine" long before it was available.
One cannot overstate how powerful IBM was in the computer industry in the 1950s and 1960s. Every competitor rightly worried that if their product worked too well for too long, it was only a matter of time before an army of IBM salesforce representatives mobilized. In their easily recognizable uniforms of starched white shirts, red ties and blue suits, IBM marketers marched on their customers and offered a more expensive, but much more defensible, choice. "Nobody gets fired for buying IBM" was a common phrase. Even competitors acknowledged that the company excelled at sales. As a UNIVAC executive once complained, 'It doesn't do much good to build a better mousetrap if the other guy selling mousetraps has five times as many salesmen.'" (Click here to see the full text)
8. PepsiCo, Inc. (NYSE:PEP)
Number of Hedge Fund Holders: 60Dividend Yield (as of March 18): 2.64%
PepsiCo, Inc. (NYSE:PEP) ranks next on our list of blue-chip stocks that pay dividends. As of March 18, the beverage firm offers a 2.64% yield to shareholders and has grown its dividend payment for 49 consecutive years.
Barclays analyst Lauren Lieberman on February 14 lowered the firm's price target on PepsiCo, Inc. (NYSE:PEP) to $180 from $186 and maintained an 'Overweight' rating on the company shares, noting that PepsiCo is guiding estimates towards the higher end of its long-term sales growth algorithm for 2022. As of March 18, PepsiCo, Inc. (NYSE:PEP) has jumped 18.13% in the last 12 months, and 6.02% in the last 6 months.
Reporting its fourth-quarter earnings on February 10, PepsiCo, Inc. (NYSE:PEP) posted an EPS of $1.53, beating estimates by $0.01. $25.25 billion in quarterly revenue was up 12.44% year-on-year and exceeded analysts' forecasts by $1.01 billion.
On March 7, PepsiCo, Inc. (NYSE:PEP) announced that it was suspending beverage sales in Russia, following suit with the withdrawal of many international brands from the country. It will also stop all new capital investments and promotional activities in Russia and will continue to supply only essential products such as dairy products, milk, and baby food products.
Fundsmith LLP was a leading shareholder in PepsiCo, Inc. (NYSE:PEP) during Q4 2021, with a stake comprising of 10.41 million shares valued at $1.80 billion, representing a 4% increase in holding from the previous quarter. In the fourth quarter of 2021, 60 hedge funds were bullish on PepsiCo, Inc. (NYSE:PEP) shares, with aggregate holdings worth $4.64 billion. This is in comparison to 61 hedge funds in the third quarter with combined positions worth $4.43 billion in the firm.
7. Broadcom Inc. (NASDAQ:AVGO)
Number of Hedge Fund Holders: 62Dividend Yield (as of March 18): 2.69%
Broadcom Inc. (NASDAQ:AVGO) is a semiconductor giant which ranks next on our list of dividend-paying blue-chip stocks. The California-based firm provides semiconductor devices and infrastructure software services. As of March 18, its dividend yield stands at 2.69%.
On March 4, Truist analyst William Stein maintained a 'Buy' rating on Broadcom Inc. (NASDAQ:AVGO) stock and increased the price target to $686 from $659. KeyBanc analyst John Vinh kept an 'Overweight' rating on the company shares, and raised the price target to $720 from $710, noting that Broadcom Inc. (NASDAQ:AVGO) disclosed strong quarterly results and guidance, and the demand for its cloud data center also remained strong.
Investors were seen buying up on Broadcom Inc. (NASDAQ:AVGO) stock in the fourth quarter, where 62 hedge funds held stakes in the firm, in comparison to 50 hedge funds in the preceding quarter.
Broadcom Inc.'s (NASDAQ:AVGO) fourth-quarter EPS came in at $8.39, above consensus estimates by $0.24. Revenue for the quarter stood at $7.71 billion, beating analysts' forecasts by $99.60 million, and representing a jump of 15.79% year-on-year.
Richie Capital Group, an investment firm, mentioned Broadcom Inc. (NASDAQ:AVGO) in its Q4 2021 investor letter. Here's what the fund said:
"Broadcom (AVGO – up 36.5%) – The semiconductor device manufacturer reported an outstanding Fiscal Q4. Results (and guidance) exceeded Wall Street analyst expectations, and the company raised its dividend by 14% and announced a new stock-repurchase program. Semiconductor related revenue grew 17% while software revenue grew 8%. On the negative side, it was rumored that Apple, their largest customer, is making plans to develop their own wireless chips. This would be a blow to Broadcom. However, AVGO has a $15 billion contract with Apple that is good through 2023 and includes radio frequency parts such as amplifiers, filters and switches."
6. Walmart Inc. (NYSE:WMT)
Number of Hedge Fund Holders: 63Dividend Yield (as of March 18): 1.54%
Walmart Inc. (NYSE:WMT) is a superstore giant based in the United States. Jefferies analyst Stephanie Wissink believes the company is poised to gain further market share in the current inflationary macro environment. She has a 'Buy' rating on Walmart Inc. (NYSE:WMT) and a price target of $175, down from $184.
On February 17, Walmart Inc. (NYSE:WMT) declared a $0.56 per share quarterly dividend, representing a 1.8% increase from its previous dividend of $0.55. The firm's dividend yield stands at 1.54% as of March 18.
In the fourth quarter, Walmart Inc. (NYSE:WMT) disclosed earnings per share of $1.53, outperforming analysts' estimates by $0.03. Quarterly revenue stood at $151.53 billion, which was above analysts' forecasts by $1.49 billion.
Out of all the hedge funds tracked by Insider Monkey, 63 hedge funds were long Walmart Inc. (NYSE:WMT) shares at the end of the fourth quarter, with combined positions worth $7.13 billion. In comparison, 71 hedge funds held shares in the firm a quarter ago. GQG Partners was the top shareholder of Walmart Inc. (NYSE:WMT) stock in the fourth quarter, holding 10.42 million shares worth $1.5 billion.
Along with Johnson & Johnson (NYSE:JNJ), Broadcom Inc. (NASDAQ:AVGO), and The Coca-Cola Company (NYSE:KO), Walmart Inc. (NYSE:WMT) is an exciting blue-chip stock offering dividends.
Click to continue reading and see 5 Blue Chip Stocks with Dividends. Suggested articles:
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Disclosure. None. 10 Blue Chip Stocks with Dividends is originally published on Insider Monkey.
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