10 Best Blue Chip Dividend Stocks to Buy in August

Published on August 12, 2022 at 10:42 am by Vardah Gill in Hedge Funds, News

In this article, we discuss 10 best blue chip dividend stocks to buy in August.

The current market environment has forced investors to flee growth stocks in favor of dividend names, such as The Coca-Cola Company (NYSE:KO), PepsiCo, Inc. (NASDAQ:PEP), and The Procter & Gamble Company (NYSE:PG).

As the Federal Reserve is most likely to raise interest rates further, investors are worried about the shrinking economy. In CNBC’s Feds Survey conducted in July, 55% of the respondents reported that there is a high chance of a recession in the next 12 months, up 20 points from May’s survey. Moreover, as GDP forecasts have been slashed every quarter this year, investors believe that the stock market has already priced in a recession. Considering this, analysts are highlighting the importance of dividend stocks now more than ever. According to a report by Goldman Sachs, the S&P 500 delivered a total return of 77% in the 1970s and dividend reinvestments accounted for three quarters’ returns during this high inflationary period. The report further mentioned that dividends have made up about half of the total returns of the MSCI AC World Index over the past two decades.

Photo by Karolina Grabowska: https://www.pexels.com/photo/hands-holding-us-dollar-bills-4968630/

Our Methodology

We selected blue chip dividend stocks that are popular among hedge funds, have strong fundamentals and have the ability to weather the current economic storm.

10. Mastercard Incorporated (NYSE:MA)

Dividend Yield as of August 11: 0.56%

Mastercard Incorporated (NYSE:MA) is one of the best blue chip dividend stocks as it has been raising its dividends consistently for the past ten years. The financial services company pays a quarterly dividend of $0.49 per share, with a dividend yield of 0.56%, as of August 11.

In Q2 2022, Mastercard Incorporated (NYSE:MA) reported solid earnings, with its operating cash flow amounting to $2.4 billion, up from $1.78 billion in the previous quarter. The company generated $2.27 billion in free cash flow, compared with $1.48 billion in Q1 2022. Its dividends are safe for the future as the company attributed $447 million to dividend payments, taking its payout ratio to 23.81%.

In August, BMO Capital raised its price target on Mastercard Incorporated (NYSE:MA) to $422 with an Outperform rating on the shares, as the company’s Q2 results benefitted from cross-border travel recovery and credit.

Mastercard Incorporated (NYSE:MA) was the eighth famous company among elite funds in Q1 2022, as 136 hedge funds in Insider Monkey’s database owned stakes in the company, down from 144 in the previous quarter. The collective value of these stakes is over $15.4 billion. Akre Capital Management owned a stake worth over $2 billion in the New York-based company, becoming its largest stakeholder in Q1.

Though Mastercard Incorporated (NYSE:MA) is down 5.49% year-to-date, it is still outperforming the broader market like famous dividend stocks such as The Coca-Cola Company (NYSE:KO), PepsiCo, Inc. (NASDAQ:PEP), and The Procter & Gamble Company (NYSE:PG).

Polen Capital mentioned Mastercard Incorporated (NYSE:MA) in its Q1 2022 investor letter. Here is what the firm has to say:

“We added to both Visa and Mastercard during the final quarters of 2021, based on the belief that both businesses were trading at attractive prices and poised to deliver, double-digit returns over the next three to five years. Cross-border transactions–a highly profitable business segment for both companies–represent roughly 10% of Visa and Mastercard’s volumes and 25% of their gross revenues, so lockdowns have severely impacted this segment due to stifled travel. While it was impossible to know when people would begin traveling again, we accepted this reality with the belief that travel would eventually return. Both companies have commented that as soon as a country or geography reopens, cross-border volumes reignite, amplifying each business’s growth and profitability. We think these near- term headwinds have created an attractive long-term investment opportunity.”

9. Nordson Corporation (NASDAQ:NDSN)

Dividend Yield as of August 11: 0.85%

Nordson Corporation (NASDAQ:NDSN) is an Ohio-based manufacturing company that specializes in dispensing equipment for consumer and industrial sealants and coatings. On August 10, the company declared a 28% hike in its quarterly payout to $0.65 per share. This marked the company’s 59th consecutive year of dividend growth. As of August 11, the stock’s dividend yield was recorded at 0.85%.

At the end of Q1 2022, Nordson Corporation (NASDAQ:NDSN) had $120.9 million available in cash and cash equivalents, and its total assets stood at over $3.4 billion. The company generated over $84 million in free cash flow and spent $59.3 million in dividends during the quarter. Nordson Corporation (NASDAQ:NDSN) has a safe payout ratio of 23.3%.

The number of hedge funds tracked by Insider Monkey owning stakes in Nordson Corporation (NASDAQ:NDSN) stood at 27 in Q1 2022, falling from 34 in the previous quarter. These stakes hold a collective value of roughly $230 million.

8. NIKE, Inc. (NYSE:NKE)

Dividend Yield as of August 11: 1.07%

NIKE, Inc. (NYSE:NKE) is an Oregon-based manufacturing company that deals in the design and development of footwear, apparel, and other related accessories. The company ended Q2 2022 with over $8.5 billion available in cash and cash equivalents and over $40.3 billion in total assets. Its operating cash flow for the quarter came in at over $1.1 billion and it generated $909 million in free cash flow. NIKE, Inc. (NYSE:NKE) paid $481 million in dividend payments in Q2, up 11% from the same period last year.

NIKE, Inc. (NYSE:NKE) has been raising its dividends consecutively for the past 20 years. The company currently pays a quarterly dividend of $0.305 per share, with a dividend yield of 1.07%, as of August 11.

In July, Stifel set a $130 price target on NIKE, Inc. (NYSE:NKE) with a Buy rating on the shares, cutting its estimates for American Sports and Lifestyle Brands due to high inventories and lower traffic.

At the end of Q1 2022, 67 hedge funds tracked by Insider Monkey owned stakes in NIKE, Inc. (NYSE:NKE), compared with 68 a quarter earlier. The collective value of these stakes stood at nearly $4 billion. Fisher Asset Management was the company’s leading stakeholder in Q1.

ClearBridge Investments mentioned NIKE, Inc. (NYSE:NKE) in its Q4 2021 investor letter. Here is what the firm has to say:

“Nike is another play on e-commerce as well as the anticipated growth in consumer spending as we learn to live with COVID-19. After selling out of the stock in 2016 due to competitive concerns, we were motivated to repurchase shares because of optimism around a new management team’s focus on accelerating Nike’s shift toward e-commerce and direct-to-consumer (DTC) distribution. Near-term supply chain issues in Vietnam and retail weakness in China that we see as ephemeral provided a good buying opportunity. We do not believe the market is giving proper credit to Nike’s potential to deliver attractive, high-single-digit revenue growth while delivering operating margin expansion as more merchandise is sold direct. Nike is also still underindexed to the women’s category, which we see as a significant ongoing catalyst.”

7. Parker-Hannifin Corporation (NYSE:PH)

Dividend Yield as of August 11: 1.76%

Parker-Hannifin Corporation (NYSE:PH) is an American corporation that specializes in motion and control technologies. The company has one of the longest dividend growth track records in the S&P 500 Index, raising its dividends for the past 66 years. It pays a quarterly dividend of $1.33 per share and has a yield of 1.76%, recorded on August 11.

In Q2 2022, Parker-Hannifin Corporation (NYSE:PH) reported strong cash flow generation, with its operating cash flow standing at $893.2 million, up from $543 million in the previous quarter. The company’s free cash flow came in at $822 million, compared with $490 million in the preceding quarter. Parker-Hannifin Corporation (NYSE:PH) paid $570 million in dividends during Q2, up from $470 million paid during the same period last year.

At the end of Q1 2022, 39 hedge funds in Insider Monkey’s database were bullish on Parker-Hannifin Corporation (NYSE:PH), the same as in the previous quarter. The stakes owned by these hedge funds hold a collective value of over $1.3 billion.

Oakmark Funds mentioned Parker-Hannifin Corporation (NYSE:PH) in its Q2 2022 investor letter. Here is what the firm has to say:

“A former long-time holding, Parker Hannifin (NYSE:PH) made its way back into the Fund this quarter. We believe investors’ perception of the company as a short-cycle, diversified manufacturer that’s heavily tied to industrial production has become stale. Since becoming CEO in 2015, Thomas Williams has vastly improved operations and shifted the portfolio to a longer cycle, higher growth, and higher return end markets. With the expected closing of the Meggitt acquisition this calendar year, Parker Hannifin’s highly depressing aerospace segment will become its largest end market. We anticipate a rebound in aerospace revenue, which combined with the company’s strong position in attractive businesses like clean energy technologies and factory automation-should further accelerate revenue growth. Parker Hannifin trades at a discount to other high-quality industrials, which we believe is unwarranted since its growth and returns should be as good or better than peers. At 12x next year’s cash earnings, Parker Hannifin is an attractive investment, in our view.”

6. NextEra Energy, Inc. (NYSE:NEE)

Dividend Yield as of August 11: 1.88%

NextEra Energy, Inc. (NYSE:NEE) is one of the best blue chip dividend stocks as the company has raised its dividends for 28 years in a row. The electric services company pays a quarterly dividend of $0.425 per share, with a dividend yield of 1.88%, as of August 11.

In Q2 2022, NextEra Energy, Inc. (NYSE:NEE) reported an operating cash flow of over $2.8 billion, up from $1.9 billion in the previous quarter. The company’s free cash flow came in at $606 million and had $639 million available in cash and cash equivalent at the end of Q2.

In July, Morgan Stanley maintained its Overweight rating on NextEra Energy, Inc. (NYSE:NEE) considering the growth of solar panels in the US. In addition to NEE, analysts and investors also presented a positive outlook on famous dividend stocks like The Coca-Cola Company (NYSE:KO), PepsiCo, Inc. (NASDAQ:PEP), and The Procter & Gamble Company (NYSE:PG).

The number of hedge funds tracked by Insider Monkey owning stakes in NextEra Energy, Inc. (NYSE:NEE) grew to 64 in Q1 2022, from 55 in the previous quarter. These stakes hold a collective value of over $2.8 billion. Fisher Asset Management was the company’s leading stakeholder in Q1, owning a stake worth over $1.3 billion.

5. Genuine Parts Company (NYSE:GPC)

Dividend Yield as of August 11: 2.28%

Genuine Parts Company (NYSE:GPC) is a Georgia-based American services company that specializes in the distribution of automotive replacement parts. In Q2 2022, the company reported an operating cash flow of $392 million and its free cash flow came in at $317.2 million. It paid $243 million in dividends during the quarter, which shows that the company’s free cash flow generation is stable to support future dividends.

Genuine Parts Company (NYSE:GPC) has extended its run of dividend increases to 66 years and pays a quarterly dividend of $0.895 per share. As of August 11, the stock’s dividend yield came in at 2.28%.

At the end of Q1 2022, 29 hedge funds tracked by Insider Monkey owned stakes in Genuine Parts Company (NYSE:GPC), the same as in the previous quarter. The collective value of these stakes is over $457 million. Arrowstreet Capital was the company’s leading stakeholder in Q1.

4. Cincinnati Financial Corporation (NASDAQ:CINF)

Dividend Yield as of August 11: 2.68%

Cincinnati Financial Corporation (NASDAQ:CINF) is an Ohio-based insurance company that specializes in property and casualty insurance. In Q2 2022, the company had over $1 billion available in cash and cash equivalents, and its total assets amount to over $29 billion. The company’s operating cash flow came in at $557 million and its free cash flow for the quarter stood at $553 million.

In May, Cincinnati Financial Corporation (NASDAQ:CINF) declared a quarterly dividend of $0.69 per share, raising it by 10% in January. The company maintains a 61-year track record of consistent dividend growth. As of August 11, the stock’s dividend yield came in at 2.68%.

According to Insider Monkey’s data, 21 hedge funds presented a bullish stance on Cincinnati Financial Corporation (NASDAQ:CINF) in Q1 2022 and held stakes worth nearly $172 million in the company. Among these hedge funds, Millennium Management owned the largest stake in the insurance company, worth $55.7 million.

3. Broadcom Inc. (NASDAQ:AVGO)

Dividend Yield as of August 11: 2.98%

Broadcom Inc. (NASDAQ:AVGO), a California-based semiconductor company, reported over $4.15 billion in free cash flow in Q1 2022, up from $3.38 billion in the previous quarter. The company’s operating cash flow grew to $4.2 billion, from $3.48 billion in the preceding quarter. Its cash flow generation is enough for future payouts, as dividend payments represented $1.7 billion of its FCF in Q1.

Broadcom Inc. (NASDAQ:AVGO) pays a quarterly dividend of $4.10 per share, with a dividend yield of 2.98%, as recorded on August 11. The company has been consistently raising its dividends for 11 years.

In July, Deutsche Bank set a $635 price target on Broadcom Inc. (NASDAQ:AVGO) with a Buy rating on the shares. The firm believes that the company is well-positioned to survive the possible supply chain issues.

At the end of Q1 2022, 71 hedge funds tracked by Insider Monkey owned stakes in Broadcom Inc. (NASDAQ:AVGO), up from 62 in the previous quarter. These stakes hold a combined value of over $5.4 billion, compared with $4.8 billion worth of stakes owned by hedge funds in the preceding quarter.

ClearBridge Investments mentioned Broadcom Inc. (NASDAQ:AVGO) in its Q4 2021 investor letter. Here is what the firm has to say:

“However, ClearBridge portfolio companies are responding by supporting their workforces and showing resilience in adapting and thriving. Semiconductor companies ClearBridge owns and engages with have been successful in advancing vaccinations in their global supply chains. In Malaysia, for example, Broadcom has taken part in PIKAS, a public-private partnership vaccination program focusing on the workforce in critical manufacturing sectors. By the summer of 2021 Broadcom was able to get over 90% of workers in its Penang factory at least one dose of vaccine, and roughly 73% fully vaccinated. Companies in the program also pay the administration cost for vaccinations including cases where the employee is no longer employed by the company before full immunization of the employee.”

2. Verizon Communications Inc. (NYSE:VZ)

Dividend Yield as of August 11: 5.67%

Verizon Communications Inc. (NYSE:VZ) is an American telecommunications company that provides data and video services and solutions to its consumers. The company’s cash position remained solid in Q2 2022, as it reported an operating cash flow of over $10.8 billion, up from $6.8 billion in the previous quarter. Its free cash flow came in at $5.7 billion, contributing to smooth shareholder returns during the quarter.

Verizon Communications Inc. (NYSE:VZ) pays a quarterly dividend of $0.64 per share, growing it by 2% in October 2021. The company maintains a 15-year streak of dividend growth and has not declared a single dividend cut since 1985. As of August 11, the stock’s dividend yield stood at 5.67%.

According to BofA, Verizon Communications Inc. (NYSE:VZ) is a forward-thinking company with premium assets as it grew its 5G business over time. The firm set a $51 price target on the stock in July, with a Neutral rating on the shares.

As per Insider Monkey’s Q1 2022 database, 69 hedge funds were bullish on Verizon Communications Inc. (NYSE:VZ), up from 63 in the previous quarter. The stakes owned by these hedge funds are valued at over $4 billion. Fisher Asset Management was the company’s leading shareholder in Q1.

Weitz Investment Management mentioned Verizon Communications Inc. (NYSE:VZ) in its Q4 2021 investor letter. Here is what the firm had to say:

“After several quarters of pandemic-induced outsized growth, new broadband connection growth has slowed for U.S. cable operators. This slower growth has coincided with a renewed push by competitors like Verizon and AT&T to offer high-speed data (either via wireless connects or by building new fiber-optic networks).”

1. British American Tobacco p.l.c. (NYSE:BTI)

Dividend Yield as of August 11: 8.89%

British American Tobacco p.l.c. (NYSE:BTI) is a London-based cigarette manufacturing company that also deals in tobacco and other nicotine products. In July, BofA called the stock its favorite staples company in the category and lifted its price target on the stock to $54 while maintaining a Buy rating on the shares.

In July, British American Tobacco p.l.c. (NYSE:BTI) declared a quarterly dividend of $0.735 per share and had an attractive dividend yield of 8.89%, as of August 11. The company has been raising its dividend consistently for the past 23 years.

At the end of Q1 2022, 19 hedge funds tracked by Insider Monkey reported owning stakes in British American Tobacco p.l.c. (NYSE:BTI), up from 18 in the previous quarter. These stakes hold a combined value of over $2.2 billion.

Distillate Capital Partners LLC mentioned British American Tobacco p.l.c. (NYSE:BTI) in its Q1 2022 investor letter. Here is what the firm has to say:

“Distillate Capital’s International FSV Strategy is less expensive, more fundamentally stable, and less levered than the benchmark All Country World Ex U.S. (ACWI-EX US) Index.The largest new position is British American Tobacco (NYSE:BTI), which was not owned previously due to leverage, but now passes that threshold and offers an 11% free cash flow to market cap yield.”

You can also take a look at 10 Best Dividend Stocks of All Time and 10 Best Roth IRA Stocks to Buy and Hold for Long Term

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