In this article, we will take a look at some of the best blue-chip stocks to invest in.
Dividend stocks have fallen behind the broader market this year as investors have piled into tech and AI names. Still, that doesn’t take away from their long-term value. Kirsten Cabacungan, an investment strategist in the Chief Investment Office at Merrill and Bank of America Private Bank, points out that total return is about more than just share price moves. Dividend income matters too.
She noted that dividend-paying stocks can play an important role in a portfolio for a couple of reasons. The cash they generate can help cover ongoing income or liquidity needs. Just as importantly, strategies focused on dividends have historically helped smooth out returns, reducing volatility and offering some protection when markets pull back.
Morningstar columnist Dan Lefkovitz makes a similar case, noting that well-established, financially stable companies are in a better position to keep paying dividends than weaker peers. A key metric to watch is the payout ratio, which shows how much of a company’s earnings are being paid out to shareholders. He made the following comment:
“So on a couple of our dividend indexes, we screen out any company that has a payout ratio over 75%. So if you’re paying over 75% of earnings in dividends, we consider that to be risky and unsustainable. Yes, in theory, a company, a sector, an industry that has more predictable earnings, less volatile earnings should be able to sustain a higher payout ratio.”
According to Lefkovitz, firms with durable competitive advantages, or economic moats, tend to support their dividends more consistently. By contrast, companies with high payout ratios are more likely to run into trouble and end up cutting their dividends.
Given this, we will take a look at some of the best blue-chip stocks with growing dividends.
Our Methodology:
For this article, we screened for companies with a market cap above $10 billion with dividend growth streaks of at least 10 years. From that list, we identified stocks with positive analyst sentiment and picked 15 companies with the highest number of hedge fund investors, as per Insider Monkey’s database of Q3 2025.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 427.7% since May 2014, beating its benchmark by 264 percentage points (see more details here).
15. The J. M. Smucker Company (NYSE:SJM)
Number of Hedge Fund Holders: 41
The J. M. Smucker Company (NYSE:SJM) is one of the best blue-chip stocks to invest in.
On November 26, BofA lifted its price target on The J. M. Smucker Company (NYSE:SJM) to $120 from $118 while maintaining a Neutral rating. The update followed the company’s Q2 results, where adjusted EPS edged past BofA’s expectations. In response to this, the firm nudged up its longer-term outlook, raising its FY27 adjusted EPS estimates to $10 from $9.8 and its FY28 forecasts to $10.80 from $10.60. BofA pointed to management’s view that the momentum building in FY26 could translate into algorithm-level or better growth in FY27, opening the door to $10-plus of EPS next year.
In its fiscal Q2 2026 earnings update, The J. M. Smucker Company (NYSE:SJM) highlighted ongoing progress in its Sweet Baked Snacks business and the Hostess brand. Management noted improving performance in convenience stores, with volume share gains becoming more visible. While Sweet Baked Snacks are expected to be flat to slightly lower in Q3, the company sees growth returning in Q4. Pet treats are also projected to move back into growth, and Uncrustables remains on pace to surpass $1 billion in sales by the end of the year.
The company’s coffee segment posted a profit margin of 18.2% in Q2. Margins are expected to tick higher in Q3, though they are likely to stay below 20%, before moving above that level in Q4 as tariff-related pressures ease. Overall, net sales reached $2.3 billion for the quarter, up $58.9 million, or 3%, compared with the same period last year.
The J. M. Smucker Company (NYSE:SJM) is a leading American food and beverage company with a portfolio of well-known brands spanning coffee, consumer foods, and pet food.
14. Colgate-Palmolive Company (NYSE:CL)
Number of Hedge Fund Holders: 56
Colgate-Palmolive Company (NYSE:CL) is among the best blue-chip stocks to invest in.
On December 11, Argus analyst Taylor Conrad downgraded Colgate-Palmolive Company (NYSE:CL) to Hold from Buy, citing mounting pressures on the company’s profitability. According to the firm, rising raw material costs and ongoing tariff headwinds have eroded margins, making the risk-reward less compelling at current levels. Argus that it would be open to upgrading the stock again if the volume trends stabilize and margins show clear signs of improvement, Conrad noted in a research update.
During its Q3 2025 earnings release, Colgate-Palmolive Company (NYSE:CL) reaffirmed its commitment to its long-term 2030 Strategy, pointing to the strength of its core brands and their positions in categories that continue to expand globally. The company also highlighted its broad international footprint, with nearly half of its business tied to faster-growing emerging markets, supported by a highly efficient global supply chain.
In addition, Colgate outlined progress on a revamped innovation approach, directing more resources toward science-based product development across all price points. The company said that investments in AI, predictive analytics, and automation were key tools to enhance efficiency and enable more personalized offerings at scale.
Colgate-Palmolive Company (NYSE:CL) updated its outlook for organic sales growth, saying full-year results are expected to track closely with year-to-date performance, implying roughly 1.2% growth. This forecast reflects a 70 basis point headwind from exiting private-label operations. Management also confirmed that its EPS guidance remains unchanged.
Colgate-Palmolive Company (NYSE:CL) is a global consumer products company that produces and markets everyday household staples, with a focus on oral, personal, and home care products.
13. American Electric Power Company, Inc. (NASDAQ:AEP)
Number of Hedge Fund Holders: 56
American Electric Power Company, Inc. (NASDAQ:AEP) is among the best blue-chip stocks to invest in.
On December 12, JPMorgan analyst Jeremy Tonet raised his price target on American Electric Power Company, Inc. (NASDAQ:AEP) to $125 from $121, while maintaining a Neutral rating on the stock. The adjustment followed updates to the firm’s models across the North American utilities sector.
Electric demand is now accelerating at its fastest pace since the 1960s and 1970s, and forecasts continue to move higher. A major driver behind that trend is the rapid expansion of AI infrastructure, which is expected to require a massive increase in power generation. Capacity tied to data center growth alone is projected to jump from about 45 GW today to more than 130 GW by 2030. In November, Gabelli Funds portfolio manager Tim Winter said several stocks are positioned to benefit from this shift, with AEP among the names he highlighted.
American Electric Power Company, Inc. (NASDAQ:AEP) has already begun adjusting to this backdrop. The company recently raised its long-term EPS growth outlook to 7%–9%, up from 6%–8%, reflecting expectations for roughly 28 GW of incremental peak demand by 2030. About 22 GW of that demand is expected to come from data centers. AEP also increased its five-year capital investment plan to $72 billion and disclosed a sizable backlog, with roughly 190 GW of customers currently waiting to interconnect to its system.
In November, the company also announced long-term strategic agreements with Quanta Services. The partnerships are designed to support execution of AEP’s expanded capital plan, including the buildout of high-voltage transmission, while strengthening supply chain reliability and expanding development capabilities. These efforts are aimed in part at meeting rising demand from the fast-growing data center market.
American Electric Power Company, Inc. (NASDAQ:AEP) is one of the largest electric utility companies in the U.S., providing generation, transmission, and distribution services to more than 5 million customers across 11 states.
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