In this article, we discuss 10 best blue chip dividend stocks to invest in.
Investors around the world are worried that rising inflation could trigger a recession in the coming months. According to New York Times, BofA analyst Ethan Harris has forecasted a 40% chance of recession in the next year. The analyst also expects economic growth to slow to almost zero in the second half of 2023. Similarly, Deutsche Bank also expects the economy to enter recession sooner than anticipated and forecasts that the growth will slow to 0.5% in 2023.
The ongoing economic situation and the tech stocks sell-off in 2022 have shifted investors’ attention from high-growth tech stocks to blue-chip companies that pay dividends. Companies like Exxon Mobil Corporation (NYSE:XOM), PepsiCo, Inc. (NASDAQ:PEP), and The Procter & Gamble Company (NYSE:PG) are appealing to investors as their financial health supports consistent dividend payments. The historical performance of dividend stocks shows that they have outperformed their peers during heightened economic uncertainty. According to a report by Fidelity, high dividend payers outplayed the wider market during the last two bear markets. The report further mentioned that dividends have represented nearly half of the total returns of the S&P 500 over the past 30 years.
Considering the current market turmoil, many companies raised or reinstated their dividends after slashing their payouts due to the pandemic in 2020. The results are evident from an S&P Global’s report, which stated that total dividend increases in Q2 2022 were $19.3 billion, compared with $15.4 billion during the same period last year. In view of this, we will discuss blue chip dividend stocks to invest in.
Photo by Marga Santoso on Unsplash
Our Methodology:
For this list, we chose stable and well-established companies with strong dividend histories. In addition to this, these companies have also shown sound financial performance over the years, offering good investment opportunities in the current economic environment. The stocks are ranked according to their yields.
10 Best Blue Chip Dividend Stocks to Invest In
10. UnitedHealth Group Incorporated (NYSE:UNH)
Dividend Yield as of August 26: 1.22%
UnitedHealth Group Incorporated (NYSE:UNH) provides insurance and healthcare services to its consumers. On August 17, the company declared a quarterly dividend of $1.65 per share, in line with its previous dividend. It started paying annual dividends in 1990 and shifted to quarterly payments in 2010. The company maintains a 12-year streak of dividend growth, raising its payout by 130% in the last five years. As of August, the stock’s dividend yield came in at 1.22%.
In Q2 2022, UnitedHealth Group Incorporated (NYSE:UNH) reported revenue of $80.3 billion, up 13% from the same period last year. The company’s earnings from operations also grew 19% year-over-year to $7.1 billion. Its cash flow from operations came in at $6.9 billion. UnitedHealth Group Incorporated (NYSE:UNH) also remained committed to shareholder returns, paying nearly $4 billion in dividends and share repurchases.
In August, Mizuho lifted its price target on UnitedHealth Group Incorporated (NYSE:UNH) to $600 and kept a Buy rating on the shares, increasing estimates based on the company’s higher business outlook.
As of the close of Q2 2022, 91 hedge funds in Insider Monkey’s database owned stakes in UnitedHealth Group Incorporated (NYSE:UNH), falling from 103 in the previous quarter. The collective value of these stakes is roughly $11 billion. GQG Partners was the company’s leading stakeholder in Q2, owning stakes worth over $1.6 billion.
In addition to Exxon Mobil Corporation (NYSE:XOM), PepsiCo, Inc. (NASDAQ:PEP), and The Procter & Gamble Company (NYSE:PG), UNH is another blue chip dividend stock to consider in times of financial volatility.
Wedgewood Partners mentioned UnitedHealth Group Incorporated (NYSE:UNH) in its Q2 2022 investor letter. Here is what the firm has to say:
“UnitedHealth Group also contributed to performance during the quarter. United’s operating income grew +3% on difficult year-ago comparisons as benefits members utilized more services compared to last year. Optum Health grew operating income +40% as more patients are enrolled in the Company’s value-based care services. The Company estimates nearly a third of all medical care is unnecessary and represents an opportunity to capture savings for both patients. Optum’s integrated platform of patient data, IT, and service providers are focused on driving out these unnecessary costs and should serve as the engine for long-term, mid-teens earnings per share growth.”
9. Accenture plc (NYSE:ACN)
Dividend Yield as of August 26: 1.25%
Accenture plc (NYSE:ACN) is an Irish-American information technology company that specializes in related services and consulting. The company’s price target was raised by Baird in August to $338, highlighting its acquisition of an Indonesia-based tech company. The firm believes that this acquisition could enhance the company’s annualized revenue.
In fiscal Q3 2022, Accenture plc (NYSE:ACN) reported new bookings of $17 billion, which were the company’s second-highest ever. The company’s revenue for the quarter came in at $16.16 billion, showing a 21.9% year-over-year growth. In addition to this, its operating income also grew by 23% from the same period last year to $2.6 billion.
Accenture plc (NYSE:ACN) pays a quarterly dividend of $0.97 per share, with a dividend yield of 1.25%, as of August 26. The company has been raising its dividends consistently for the past 16 years. In fiscal Q3, it paid $614 million to shareholders in dividends.
As per Insider Monkey’s Q2 2022 database, 61 hedge funds owned stakes in Accenture plc (NYSE:ACN), compared with 63 a quarter earlier. These stakes hold a total value of over $3.1 billion.
Polen Capital mentioned Accenture plc (NYSE:ACN) in its Q1 2022 investor letter. Here is what the firm has to say:
“Accenture’s business is firing on all cylinders and continue to enjoy an acceleration in their respective fundamentals because of the increase in digitization around the world. Nearly every company today is searching for ways to become more digital, and Accenture is positioned to provide many of the solutions these companies seek. This inflection in fundamentals was not lost on the market, and each business’s stock performed exceptionally well in 2021. In fact, they represented two of the three top absolute performers for the Global Growth Portfolio last year. As a result, its stock is currently more fully priced. As such, we lowered Accenture to an average weight. We maintain high conviction in the business and plan to own it for many years, but recognize the increase in their prices.”
8. American Express Company (NYSE:AXP)
Dividend Yield as of August 26: 1.28%
An American multinational credit card services company, American Express Company (NYSE:AXP) was a part of 67 hedge fund portfolios in Q2 2022, according to Insider Monkey’s data. The stakes owned by these hedge funds are collectively valued at over $25.2 billion. With over $21 billion worth of stakes, Berkshire Hathaway was the company’s leading stakeholder in Q2.
In Q2 2022, American Express Company (NYSE:AXP) reported a 30.9% year-over-year growth in its revenue to $13.4 billion. This growth was driven by an increase in card member spending compared with the prior-year period. For FY22, the company expects its revenue to grow in the range of 23% to 25%.
American Express Company (NYSE:AXP) pays a quarterly dividend of $0.52 per share, raising it by 20% in March. The company has been making consistent dividend payments for the past 30 years. As of August 26, the stock’s dividend yield came in at 1.28%.
Highlighting the company’s underlying billing activities and growing revenue, RBC Capital raised its price target on American Express Company (NYSE:AXP) in July to $180 and maintained a Sector Perform rating on the shares.
7. NextEra Energy, Inc. (NYSE:NEE)
Dividend Yield as of August 26: 1.90%
NextEra Energy, Inc. (NYSE:NEE), an American electric services company, reported strong results in Q2 2022. The company posted revenue of $5.1 billion, which showed a 31.8% year-over-year growth. Its operating cash flow for the quarter came in at $2.8 billion, compared with $1.9 billion in the previous quarter. The company’s free cash flow stood at $606 million with $629 million available in cash and cash equivalents.
NextEra Energy, Inc. (NYSE:NEE) has been raising its dividends consistently for the past 28 years. Its current quarterly payout stands at $0.425 per share, with a dividend yield of 1.90%, as of August 26.
In August, Morgan Stanley raised its price target on NextEra Energy, Inc. (NYSE:NEE) to $94 with an Equal Weight rating on the shares, as the firm increased its growth rate estimates for clean energy stocks.
In Q2 2022, Fisher Asset Management owned stakes worth over $1.2 billion in NextEra Energy, Inc. (NYSE:NEE), becoming the company’s largest stakeholder. In addition to this, 59 hedge funds in Insider Monkey’s database owned positions in the Florida-based company in Q2, with stakes valued at over $2.76 billion.
ClearBridge Investments mentioned NextEra Energy, Inc. (NYSE:NEE) in its recently-published Q2 2022 investor letter. Here is what the firm has to say:
“We increased our exposure to the energy transition during the quarter with new positions in Iberdrola (OTCPK:IBDSF), a Spanish-based integrated utility that is also one of the leading renewable energy developers in the world, and NextEra Energy, Inc. (NYSE:NEE), an integrated utility business with a regulated utility operating in Florida and the largest wind business in the U.S. The war has opened the eyes of the world and energy independence is critical. Renewables are for many countries the only way to get to the target. It is expected that existing renewable project pipelines will be executed faster, and more projects added to existing pipelines.
The energy transition would be extremely helpful for climate change and Iberdrola ranks well on our ESG matrix. NextEra, meanwhile, recently raised future earnings forecasts, citing a very favorable macro environment for rapid renewable generation expansion driven by decarbonization of the U.S. economy and the relative attractiveness of renewable generation in the context of high natural gas and power prices.”
6. McDonald’s Corporation (NYSE:MCD)
Dividend Yield as of August 26: 2.10%
McDonald’s Corporation (NYSE:MCD) is an American multinational fast food chain and leading global foodservice retailer. In August, BMO Capital raised its price target on the stock to $300 with an Outperform rating on the shares, highlighting the company’s accelerated growth post-pandemic.
In Q2 2022, McDonald’s Corporation (NYSE:MCD) reported a 9.7% year-over-year growth in its global comparable sales, with growth across all segments. The company’s systemwide sales grew by 4% and digital sales in its top six markets exceeded $6 billion for the quarter.
McDonald’s Corporation (NYSE:MCD) holds one of the longest track records of dividend growth, raising its payouts consistently for the past 46 years. It currently pays a quarterly dividend of $1.38 per share, with a dividend yield of 2.10%, as of August 26. MCD can be a great addition to dividend portfolios among other dividend stocks, such as Exxon Mobil Corporation (NYSE:XOM), PepsiCo, Inc. (NASDAQ:PEP), and The Procter & Gamble Company (NYSE:PG).
At the end of Q2 2022, 50 hedge funds tracked by Insider Monkey reported owning stakes in McDonald’s Corporation (NYSE:MCD), down from 58 a quarter earlier. These stakes hold a combined value of over $2.3 billion.
5. Hormel Foods Corporation (NYSE:HRL)
Dividend Yield as of August 26: 2.02%
Hormel Foods Corporation (NYSE:HRL) is an American food processing company that specializes in packaging and selling various food products. The company’s Q2 results came in strong as its revenue of $3.1 billion showed an 18.8% year-over-year growth. Its cash flow from operations also grew by 24% to $193 million. The company ended the quarter with $861.7 million available in cash and cash equivalents.
Hormel Foods Corporation (NYSE:HRL) currently pays a quarterly dividend of $0.26 per share, raising it by 6% in November 2021. Through this increase, the company extended its dividend growth streak to 56 years. As of August 26, the stock’s dividend yield stood at 2.02%.
In August, Stephens presented a positive outlook of Hormel Foods Corporation (NYSE:HRL), highlighting the underlying growth of its business. The firm raised its price target on the stock to $55 while maintaining an Equal Weight rating on the shares.
At the end of Q2 2022, 27 hedge funds in Insider Monkey’s database owned stakes in Hormel Foods Corporation (NYSE:HRL), compared with 30 a quarter earlier. These stakes are valued at over $434.5 million. With nearly 3 million shares, Renaissance Technologies was the company’s leading stakeholder in Q2.
4. The Hanover Insurance Group, Inc. (NYSE:THG)
Dividend Yield as of August 26: 2.24%
The Hanover Insurance Group, Inc. (NYSE:THG) provides auto, home, and business insurance services to its consumers. Morgan Stanley initiated its coverage on the stock in June with an Equal Weight rating and a $155 price target. The firm appreciated the company’s strong balance sheet in the current environment.
At the end of June, The Hanover Insurance Group, Inc. (NYSE:THG) held over $9.6 billion in cash and invested assets and it has nearly $146 million available in cash and cash equivalents. The company’s revenue for the second quarter jumped by 9.9% year-over-year to $1.33 billion. The Hanover Insurance Group, Inc. (NYSE:THG) has been raising its dividends for 17 consecutive years. It pays a quarterly dividend of $0.75 per share, with a dividend yield of 2.24%, as of August 26.
As per Insider Monkey’s Q2 2022 database, 15 hedge funds owned stakes in The Hanover Insurance Group, Inc. (NYSE:THG), valued at nearly $64 million. In the previous quarter, 21 hedge funds owned stakes in the insurance company, worth over $97.4 million.
3. Sonoco Products Company (NYSE:SON)
Dividend Yield as of August 26: 2.98%
Sonoco Products Company (NYSE:SON) is a South Carolina-based international provider of consumer packaging and industrial products. The company was a popular stock among hedge funds in Q2 2022, as 22 funds were bullish on the company, compared with 17 in the previous quarter, according to Insider Monkey’s data. The total value of these stakes is nearly $187 million.
In Q2 2022, Sonoco Products Company (NYSE:SON) reported revenue of $1.91 billion, showcasing a 38.4% year-over-year growth. For the first half of 2022, the company’s cash flow from operations came in at $184.5 million, up from $102 million during the same period last year. Its free cash flow also jumped to $40.3 million, from $9.4 million generated in the prior-year period. The company’s dividend payments at the end of June amounted to $91.5 million.
Sonoco Products Company (NYSE:SON) holds one of the longest records of dividend payments in the packaging industry and has been raising its dividends for 38 years straight. It pays a quarterly dividend of $0.49 per share and has a yield of 2.98%, as of August 26.
In July, Citigroup initiated its coverage of Sonoco Products Company (NYSE:SON) with a Buy rating and a $66 price target, as the company increased its exposure to more defensive consumer markets.
2. State Street Corporation (NYSE:STT)
Dividend Yield as of August 26: 3.52%
State Street Corporation (NYSE:STT) is one of the oldest financial services companies, headquartered in Boston. The company has been making dividend payments for the past 24 years while maintaining a 12-year streak of dividend growth. It currently pays a quarterly dividend of $0.63 per share with a dividend yield of 3.52%, as of August 26.
In Q2 2022, State Street Corporation (NYSE:STT) reported a 25% year-over-year growth in its net interest income because of growth in loan balances. At the end of the quarter, the company’s assets under management stood at over $3.5 trillion, with continued inflows in cash. In addition to this, it paid $210 million in dividends to shareholders during the quarter.
Appreciating the company’s relatively sound fundamentals evidenced in Q2, Deutsche Bank raised its price target on State Street Corporation (NYSE:STT) to $74 while maintaining a Hold rating on the shares.
The number of hedge funds tracked by Insider Monkey owning stakes in State Street Corporation (NYSE:STT) grew to 41 in Q2 2022, from 29 in the previous quarter. The collective value of these stakes is over $667.6 million. With over 6 million shares, Harris Associates was the largest stakeholder of the Boston-based company in Q2.
1. Lincoln National Corporation (NYSE:LNC)
Dividend Yield as of August 26: 3.63%
Lincoln National Corporation (NYSE:LNC) is an American insurance company that offers multiple insurance and investment management businesses through its subsidiary companies. The company remained a popular buy among elite funds in Q2 2022, with 34 hedge fund positions, up from 25 in the previous quarter. The stakes owned by these funds have a total value of $451.4 million.
In July, JPMorgan set a $77 price target on Lincoln National Corporation (NYSE:LNC) with an Overweight rating on the shares, highlighting the insurance group’s advantage to declining Covid cases and higher rates.
Lincoln National Corporation (NYSE:LNC) pays a quarterly dividend of $0.45 per share, with a dividend yield of $3.63%. The company maintains an 11-year track record of consistent dividend growth.
You can also take a look at 10 Large-Cap Dividend Stocks with Over 5% Yield and 10 Best Blue Chip Dividend Stocks to Buy in August
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Disclosure. None. 10 Best Blue Chip Dividend Stocks to Invest In is originally published on Insider Monkey.
