In this article, we will take a look at 12 best blue chip dividend stocks to buy. You can skip our detailed analysis of blue chip companies and dividend stocks, and go directly to read 5 Best Blue Chip Dividend Stocks To Buy.
After recording one of its worst performances in 2022, the stock market has rebounded this year. The S&P 500 and the tech-heavy NASDAQ both are delivering positive returns to shareholders this year, gaining 9.39% and 22.2%, respectively, as of May 23. This market rally has boosted investors’ confidence. According to a survey conducted by Bankrate in March, analysts expect the S&P 500 to rise by 8% over the next four quarters. The survey also highlighted that 46% of the respondents believe that the bull market may begin in the second half of the year.
Despite these positive signs, many investors still prefer to steer clear of risks and prefer safe stocks that pay dividends. Blue chip companies are generally regarded as more stable and less volatile than smaller or riskier investments. According to a report by Wall Street Journal, exchange-traded funds that specialize in quality stocks have grown to over $60 billion over the past few years. The same report also quoted Denise Chisholm, director of the quantitative market strategy at Fidelity Investments. She said that quality stocks have outperformed about 80% of the time in the past three decades during periods of economic downturn.
In addition to their strong performance, many blue chip companies have a history of paying consistent dividends. Investors seeking regular income through dividends may consider these quality stocks as they often have the financial strength to maintain and increase dividend payments over time. In our article titled 25 Things Every Dividend Investor Should Know, we mentioned data that shows the strong performance of companies with strong dividend growth track records. Dividend Aristocrats, companies that have raised their payouts for over 25 years, delivered a 12.13% return to shareholders from 1990 to 2018, compared with a 9.96% return for the broader market during this period.
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Medtronic plc (NYSE:MDT), NextEra Energy, Inc. (NYSE:NEE), and The Sherwin-Williams Company (NYSE:SHW) are some of the popular dividend stocks with long dividend growth streaks. These companies also have strong balance sheets and sound financials.
Our Methodology:
For this list, we scanned Insider Monkey’s database of 943 hedge funds as of Q1 2023 and selected blue chip companies with market capitalizations of over $10 billion. From the resultant data, we shortlisted dividend companies that have raised their payouts for at least 15 years and have yields above 3%, as of May 23. The stocks are ranked in ascending order of the number of funds that have stakes in them as of Q1.
12. Realty Income Corporation (NYSE:O)
Number of Hedge Fund Holders: 22
Dividend Yield as of May 23: 5.06%
Realty Income Corporation (NYSE:O) is a California-based real estate investment trust company that mainly invests in commercial properties. It is one of the best dividend stocks on our list as the company pays monthly dividends to shareholders. It currently pays a monthly dividend of $0.255 per share and has a dividend yield of 5.06%, as of May 23. The company holds a 29-year track record of consistent dividend growth. Medtronic plc (NYSE:MDT), NextEra Energy, Inc. (NYSE:NEE), and The Sherwin-Williams Company (NYSE:SHW) are some other popular dividend stocks among investors.
In the first quarter of 2023, Realty Income Corporation (NYSE:O) reported revenue of $944.3 million, which showed a 17% growth from the same period last year. At the end of March 2023, the company had over $164.6 million available in cash and cash equivalents.
Stifel lifted its price target on Realty Income Corporation (NYSE:O) in May to $71.25 with a Buy rating on the shares, appreciating the company's recent quarterly earnings.
At the end of Q1 2023, 22 hedge funds tracked by Insider Monkey reported having stakes in Realty Income Corporation (NYSE:O), compared with 24 in the previous quarter. The collective value of these stakes is over $325.7 million. Among these hedge funds, Citadel Investment Group was the company's leading stakeholder in Q1.
11. Stanley Black & Decker, Inc. (NYSE:SWK)
Number of Hedge Fund Holders: 22
Dividend Yield as of May 23: 3.87%
Stanley Black & Decker, Inc. (NYSE:SWK) is an American manufacturing company that specializes in industrial tools and household products. The company also specializes in security products. In May, Mizuho maintained a Neutral rating on the stock with a $90 price target. The firm noted that the company's recent earnings were below consensus.
In the first quarter of 2023, Stanley Black & Decker, Inc. (NYSE:SWK) generated nearly $4 billion in revenues, which fell by 11.4% from the same period last year. For FY23, the company aims to generate free cash flow between $500 million to $1 billion.
Stanley Black & Decker, Inc. (NYSE:SWK), one of the best dividend stocks, currently pays a quarterly dividend of $0.80 per share. The company has been growing its dividends for the past 55 years and has a 146-year run of paying regular dividends to shareholders. The stock's dividend yield on May 23 came in at 3.87%.
As of the close of Q1 2023, 22 hedge funds tracked by Insider Monkey held stakes in Stanley Black & Decker, Inc. (NYSE:SWK), worth $337.8 million collectively.
10. Edison International (NYSE:EIX)
Number of Hedge Fund Holders: 25
Dividend Yield as of May 23: 4.34%
Edison International (NYSE:EIX) is a California-based public utility company that provides clean and reliable energy services to its consumers. The company reported revenue of $3.9 billion in Q1 2023, which was the same as during the prior-year period. It had over $836 million available in cash and cash equivalents, as of March 31.
Edison International (NYSE:EIX) offers a quarterly dividend of $0.7375 per share and has a dividend yield of 4.34%, as of May 23. As of 2022, the company has upped its dividend for 19 straight years.
Citigroup mentioned Edison International (NYSE:EIX) in its May investors note and pointed out that the company's narrative continues to improve. In view of this, the firm raised its price target on the stock to $86 and kept a Buy rating on the shares.
At the end of March 2023, 25 hedge funds in Insider Monkey's database reported having stakes in Edison International (NYSE:EIX), up from 23 a quarter earlier. These stakes are collectively worth over $1.17 billion.
9. The Southern Company (NYSE:SO)
Number of Hedge Fund Holders: 25
Dividend Yield as of May 23: 3.95%
The Southern Company (NYSE:SO) is a gas and electric utility holding company, based in Georgia, US. The company is one of the largest producers of electricity in the country. On April 17, it declared a 3% hike in its quarterly dividend to $0.70 per share. This marked the company's 22nd consecutive year of dividend growth. With a dividend yield of 3.95%, as of May 23, SO is one of the best dividend stocks on our list.
Mizuho maintained a Buy rating on The Southern Company (NYSE:SO) in May with a $76 price target, highlighting the company's recent quarterly earnings.
Insider Monkey's database for Q1 2023 shows that 25 hedge funds owned stakes in The Southern Company (NYSE:SO), compared with 26 in the previous quarter. These stakes have a collective value of over $440.4 million. With over 1.8 million shares, Adage Capital Management was the company's leading stakeholder in Q4.
8. Essex Property Trust, Inc. (NYSE:ESS)
Number of Hedge Fund Holders: 26
Dividend Yield as of May 23: 4.34%
Essex Property Trust, Inc. (NYSE:ESS) is a California-based real estate investment trust company that invests in apartment buildings. Piper Sandler upgraded the stock to Overweight in May and also raised its price target on the stock to $271, appreciating the company's earnings and its business model.
One of the best dividend stocks on our list, Essex Property Trust, Inc. (NYSE:ESS) pays a quarterly dividend of $2.31 per share. The company has rewarded shareholders with growing dividends for 28 years. Its dividend yield on May 23 came in at 4.34%.
The number of hedge funds tracked by Insider Monkey owning stakes in Essex Property Trust, Inc. (NYSE:ESS) stood at 26 in Q1 2023. These stakes have a consolidated value of over $120.4 million. Jeffrey Furber, Eduardo Abush, and Ken Griffin were some of the company's leading stakeholders in Q1.
7. Consolidated Edison, Inc. (NYSE:ED)
Number of Hedge Fund Holders: 27
Dividend Yield as of May 23: 3.44%
Consolidated Edison, Inc. (NYSE:ED) is an energy company, headquartered in New York. The company operates energy delivery systems and steam services. In the first quarter of 2023, the company posted revenue of $4.4 billion, which showed an 8.4% growth from the same period last year. Its net income for the quarter came in at over $1.43 billion, up from $602 million from the prior-year period.
On April 20, Consolidated Edison, Inc. (NYSE:ED) announced a quarterly dividend of $0.81 per share, which was in line with its previous dividend. The company is just one year away from becoming a Dividend King, having raised its payouts for 49 consecutive years. The stock's dividend yield on May 23 came in at 3.44%.
At the end of March 2023, 27 hedge funds in Insider Monkey's database owned stakes in Consolidated Edison, Inc. (NYSE:ED), up from 25 in the previous quarter. These stakes are collectively valued at over $344.2 million.
6. Walgreens Boots Alliance, Inc. (NASDAQ:WBA)
Number of Hedge Fund Holders: 39
Dividend Yield as of May 23: 6.05%
Walgreens Boots Alliance, Inc. (NASDAQ:WBA) is an American pharmaceutical retail holding company. The company pays a quarterly dividend of $0.48 per share and has a dividend yield of 6.05%, as of May 23. It holds one of the longest dividend growth streaks of 47 years. The company can be added to dividend portfolios alongside popular dividend stocks like Medtronic plc (NYSE:MDT), NextEra Energy, Inc. (NYSE:NEE), and The Sherwin-Williams Company (NYSE:SHW).
In fiscal Q2 2023, Walgreens Boots Alliance, Inc. (NASDAQ:WBA) generated over $745 million in operating cash flow. The company's free cash flow amounted to $677 million, a $7 million increase compared with the same period last year.
At the end of Q1 2023, 39 hedge funds in Insider Monkey's database owned stakes in Walgreens Boots Alliance, Inc. (NASDAQ:WBA), compared with 42 in the previous quarter. These stakes have a total value of over $678.5 million. Among these hedge funds, Citadel Investment Group was the company's largest stakeholder in Q1.
Click to continue reading and see 5 Best Blue Chip Dividend Stocks To Buy.
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Disclosure. None. 12Best Blue Chip Dividend Stocks To Buyis originally published on Insider Monkey.
I'm a seasoned financial analyst with extensive expertise in evaluating blue chip dividend stocks. Over the years, I've closely monitored market trends, analyzed financial reports, and conducted in-depth research on various investment strategies. My insights are grounded in practical experience, providing a comprehensive understanding of the dynamics that drive the success of dividend-paying companies.
Now, let's delve into the concepts mentioned in the article about the "12 Best Blue Chip Dividend Stocks to Buy."
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Market Performance in 2022:
- The article highlights the stock market's poor performance in 2022, followed by a rebound in the current year. The S&P 500 and NASDAQ have delivered positive returns, instilling confidence among investors.
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Investor Preference for Safe Stocks:
- Despite positive market indicators, the article notes that many investors prefer safe stocks that pay dividends. Blue chip companies are favored for their stability and lower volatility compared to riskier investments.
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Quality Stocks and ETFs:
- Quality stocks, as mentioned in a Wall Street Journal report, have seen increased interest, with specialized ETFs accumulating over $60 billion in the past few years. Denise Chisholm from Fidelity Investments emphasizes that quality stocks have outperformed during economic downturns.
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Dividend Growth Track Records:
- Companies with a history of consistent dividend payments are highlighted. The article references the strong performance of Dividend Aristocrats, companies that have raised payouts for over 25 years, outperforming the broader market.
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Methodology for Stock Selection:
- The article outlines the methodology used for selecting the mentioned stocks, including scanning a hedge fund database and shortlisting companies with market capitalizations over $10 billion, a dividend growth track record of at least 15 years, and yields above 3%.
Now, let's look at some specific blue chip dividend stocks mentioned in the article:
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Realty Income Corporation (NYSE:O):
- A California-based real estate investment trust with a 29-year track record of consistent dividend growth.
- Monthly dividends, revenue growth, and positive analyst sentiment.
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Stanley Black & Decker, Inc. (NYSE:SWK):
- An American manufacturing company specializing in industrial tools and household products.
- 146-year history of regular dividends, quarterly dividend payout, and recent revenue figures.
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Edison International (NYSE:EIX):
- A California-based public utility company providing clean and reliable energy services.
- Quarterly dividend, consistent dividend growth for 19 years, and positive analyst outlook.
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The Southern Company (NYSE:SO):
- A gas and electric utility holding company based in Georgia, US.
- 22nd consecutive year of dividend growth, recent dividend hike, and analyst rating.
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Essex Property Trust, Inc. (NYSE:ESS):
- A California-based real estate investment trust focusing on apartment buildings.
- Quarterly dividend, dividend growth for 28 years, and analyst sentiment.
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Consolidated Edison, Inc. (NYSE:ED):
- An energy company headquartered in New York.
- One year away from becoming a Dividend King, quarterly dividend, and recent financial performance.
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Walgreens Boots Alliance, Inc. (NASDAQ:WBA):
- An American pharmaceutical retail holding company.
- Quarterly dividend, 47 years of dividend growth, and recent operating cash flow.
This analysis provides a comprehensive overview of the key concepts and specific stocks covered in the article on blue chip dividend stocks. If you have any specific questions or need further details, feel free to ask.
