10 Best Blue Chip Dividend Stocks Hedge Funds are Buying

Published August 10, 2021 at 12:42 pm EDT Updated September 7, 2026 at 12:57 pm EDT

In this article, we will be looking at the 10 best blue chip dividend stocks hedge funds are buying.

Blue chip stocks are generally among some of the safest investment options in the market, for the sheer fact that these companies tend to be established well, recognizable, and have steadily growing or already well-developed financial standings. They are also the stocks that would make up the majority of an investment portfolio, provided the investor is following a certain set of rules outlining a dividend investment strategy. There are multiple reasons for this, but one plausible reason can be that such stocks tend to have stronger balance sheets which can also be a good thing for they company dividend.

For instance, those companies, or blue chip stocks, that have lower payout ratios would most likely be better able to continue paying out their dividends as well, and for longer time periods. To cement the above claim, we can use a Credit Suisse Quantitative Research department analysis that revealed that those dividend stocks that had lower payout ratios were evidently outperforming other dividend stocks with higher payout ratios between 1990 and 2006. This outperformance was valued at 8.2% per year between the studied time period.

Blue chip stocks tend to be a good bet in any case though, whether they are dividend paying companies, like McDonald’s Corporation (NYSE: MCD), The Coca-Cola Company (NYSE: KO), and PepsiCo, Inc. (NASDAQ: PEP), or not, like and Amazon.com, Inc. (NASDAQ: AMZN). But just when dealing with dividend stocks, especially blue chip dividend stocks, it becomes imperative to note the importance of these companies in any well-balanced portfolio especially in times of economic strife. Dividend stocks do tend to benefit investors during times of recession. Firstly, these stocks manage to be the only hedge against unemployment in truly dire situations, as they offer stable incomes even to those who are at the risk of losing their jobs and to those about to retire. Secondly, dividend stocks have historically been highly influential especially during bearish markets, between for instance 1900 and 2000. During this time period, it has been estimated that 90% of the total return of the S&P 500 came from dividends, for instance.

The importance and benefits of dividend stocks notwithstanding, it should be noted as well that these stocks must not be recklessly picked up for tens of thousands of dollars to be poured into. Even when picking among dividend stocks, certain factors such as consistent increases in yield must be taken into account. The S&P 500 Dividend Aristocrats Index, made of up companies with 25 or more years of dividend increases without break, has outperformed the S&P 500 index between 2006 and 2015 by almost 3% each year, for instance.

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Investing is becoming difficult by the day, even for the smart money. The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and July 2021, our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the SPY. Our stock picks outperformed the market by more than 124 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.

Without further ado, let’s look at the 10 best blue chip dividend stocks hedge funds are buying.

Our Methodology

We have used Insider Monkey’s data of about 866 hedge funds to pick blue chip stocks most popular among hedge funds today, and have thus ranked the stocks on our list below from the lowest to the highest number of hedge fund holders. We have also mentioned the dividend yields of each stock, while ensuring that all companies listed have mostly positive analysts’ ratings and robust fundamentals to fall back on in terms of reliability and financial strength.

Best Blue Chip Dividend Stocks Hedge Funds are Buying

10. Pfizer Inc. (NYSE: PFE)

Number of Hedge Fund Holders: 65
Dividend Yield: 3.5%

Pfizer Inc. (NYSE: PFE) is a pharmaceuticals company that works to discover and develop biopharmaceutical products for marketing and distribution across the globe. The company is based in New York and was the first to come out with a successful vaccine against the COVID-19 pandemic. It ranks 10th on our list of the best blue chip dividend stocks hedge funds are buying.

Reiterating a Neutral rating on shares of Pfizer Inc. this July, Mizuho analyst Vamil Divan raised his price target on the stock. The new price target stands at $43.

In the second quarter of 2021, Pfizer Inc. had an EPS of $1.07, beating estimates by $0.09. The company’s revenue was $18.98 billion, up 60.81% year over year and also beating estimates by $249.96 million. Pfizer Inc. has also gained 32.35% in the past 6 months and 24.91% year to date.

By the end of the first quarter of 2021, 65 hedge funds out of the 866 tracked by Insider Monkey held stakes in Pfizer Inc. worth roughly $2.01 billion. This is compared to 63 hedge funds in the previous quarter with a total stake value of approximately $1.85 billion.

Like McDonald’s Corporation, The Coca-Cola Company, PepsiCo, Inc., and Amazon.com, Inc., Pfizer Inc. is a good stock to invest in.

9. McDonald’s Corporation (NYSE: MCD)

Number of Hedge Fund Holders: 67
Dividend Yield: 2.2%

McDonald’s Corporation, an American food company operating through its restaurant franchises across the globe, ranks 9th on our list of the best blue chip dividend stocks hedge funds are buying. The company operated about 39,198 restaurants as of December 31st, 2020.

John Staszak, an analyst at Argus, this July raised his price target on shares of McDonald’s Corporation from $260 to $275. The analyst also reiterated a Buy rating on the stock in light of its Q2 earnings beat.

In the second quarter of 2021, McDonald’s Corporation had an EPS of $2.37, beating estimates by $0.25. The company’s revenue was $5.89 billion, up 56.53% year over year and also beating estimates by $319.30 million. McDonald’s Corporation has also gained 9.46% in the past 6 months and 11.64% year to date.

By the end of the first quarter of 2021, 67 hedge funds out of the 866 tracked by Insider Monkey held stakes in McDonald’s Corporation worth roughly $3.78 billion. This is compared to 62 hedge funds in the previous quarter with a total stake value of approximately $2.89 billion.

8. The Home Depot, Inc. (NYSE: HD)

Number of Hedge Fund Holders: 68%
Dividend Yield: 2%

The Home Depot, Inc. (NYSE: HD), a consumer discretionary home improvement retail company, ranks 8th on our list of the best blue chip dividend stocks hedge funds are buying. The company operates its own brand of stores across the US under the Home Depot name, offering a range of home improvement, construction, and decoration products, among other things.

Reiterating an Outperform rating on shares of The Home Depot, Inc. this May, Credit Suisse also raised its price target on the stock. The new price target currently stands at $330, versus the previous target of $319.

In the fiscal first quarter of 2022, The Home Depot, Inc. had an EPS of $3.86, beating estimates by $0.81. The company’s revenue was $37.50 billion, up 32.70% year over year and also beating estimates by $2.87 billion. The Home Depot, Inc. has also gained 17.97% in the past 6 months and 24.57% year to date.

By the end of the first quarter of 2021, 68 hedge funds out of the 866 tracked by Insider Monkey held stakes in The Home Depot, Inc. worth roughly $4.36 billion. This is compared to 79 hedge funds in the previous quarter with a total stake value of approximately $4.92 billion.

Like McDonald’s Corporation, The Coca-Cola Company, PepsiCo, Inc., and Amazon.com, Inc., The Home Depot, Inc. is a good stock to invest in.

7. Verizon Communications Inc. (NYSE: VZ)

Number of Hedge Fund Holders: 69
Dividend Yield: 4.5%

Verizon Communications Inc. (NYSE: VZ) is next on our list of the best blue chip dividend stocks hedge funds are buying, and is a communications services company leading in the wireless and broadband products and services fields. The company ranks 7th on our list and is based in New York.

This July, Tigress Financial initiated a 12-month target price on shares of Verizon Communications Inc. of about $67. The firm also reiterated a Buy rating on the stock, upheld by analyst Ivan Feinseth.

In the second quarter of 2021, Verizon Communications Inc. had an EPS of $1.37, beating estimates by $0.07. The company’s revenue was $33.76 billion, up 10.89% year over year and also beating estimates by $1.03 billion. Verizon Communications Inc. has also gained 0.29% in the past 6 months.

By the end of the first quarter of 2021, 69 hedge funds out of the 866 tracked by Insider Monkey held stakes in Verizon Communications Inc. worth roughly $11.4 billion. This is compared to 67 hedge funds in the previous quarter with a total stake value of approximately $10.5 billion.

Like McDonald’s Corporation, The Coca-Cola Company, PepsiCo, Inc., and Amazon.com, Inc., Verizon Communications Inc. is a good stock to invest in.

Miller/Howard Investments, an investment management firm, mentioned Verizon Communications Inc. in its first-quarter 2021 investor letter. Here’s what they said:

“We sold Verizon (VZ) based on concerns over how much they might spend in ongoing spectrum auctions. Management may legitimately view spending billions of dollars to expand their spectrum holdings as necessary, but we believe the payoff will be slow and will make it challenging to grow the dividend at a good pace.”

6. The Procter & Gamble Company (NYSE: PG)

Number of Hedge Fund Holders: 70
Dividend Yield: 2.5%

The Procter & Gamble Company is a consumer staples company offering a range of household and other products in North and Latin America, Europe, the Asia Pacific, Greater China, India, the Middle East, and Africa. The company ranks 6th on our list of the best blue chip dividend stocks hedge funds are buying.

Bill Chappell, an analyst at Truist, raised the price target on The Procter & Gamble Company from $140 to $145 this August, while reiterating a Hold rating on the shares as well.

In the fiscal fourth quarter of 2021, The Procter & Gamble Company had an EPS of $1.13, beating estimates by $0.04. The company’s revenue was $18.95 billion, up 7.05% year over year and also beating estimates by $569.63 million. The Procter & Gamble Company has also gained 10.89% in the past 6 months and 3.16% year to date.

By the end of the first quarter of 2021, 70 hedge funds out of the 866 tracked by Insider Monkey held stakes in The Procter & Gamble Company worth roughly $8.54 billion. This is compared to 83 hedge funds in the previous quarter with a total stake value of approximately $10.4 billion.

Like McDonald’s Corporation, The Coca-Cola Company, PepsiCo, Inc., and Amazon.com, Inc., The Procter & Gamble Company is a good stock to invest in.

5. AbbVie Inc. (NYSE: ABBV)

Number of Hedge Fund Holders: 72
Dividend Yield: 4.5%

AbbVie Inc. (NYSE: ABBV), a healthcare and biotech company selling pharmaceuticals across the globe, ranks 5th on our list of the best blue chip dividend stocks hedge funds are buying. The company is based in North Chicago and was founded in 2012.

David Toung, an analyst at Argus, raised his price target on shares of AbbVie Inc. this August. The new price target stands at $140, $10 higher than the previous target of $130. Toung also reiterated a Buy rating on the shares.

In the second quarter of 2021, AbbVie Inc. had an EPS of $3.11, beating estimates by $0.08. The company’s revenue was $13.96 billion, up 33.9% year over year and also beating estimates by $322.64 million. AbbVie Inc. has also gained 9.62% in the past 6 months and 8.21% year to date.

By the end of the first quarter of 2021, 72 hedge funds out of the 866 tracked by Insider Monkey held stakes in AbbVie Inc. worth roughly $5.92 billion. This is compared to 83 hedge funds in the previous quarter with a total stake value of approximately $6.97 billion.

4. Merck & Co., Inc. (NYSE: MRK)

Number of Hedge Fund Holders: 79
Dividend Yield: 3.4%

Merck & Co., Inc., yet another healthcare company, is next on our list of the best blue chip dividend stocks hedge funds are buying and ranks 4th. The company offers both human health pharmaceuticals and animal health pharmaceuticals. It is based in New Jersey.

This July, Truist analyst Robyn Karnauskas took over coverage of shares of Merck & Co., Inc.. The analyst placed a Buy rating on the stock alongside a $92 price target.

In the second quarter of 2021, Merck & Co., Inc. had an EPS of $1.31, missing estimates by $0.04. The company’s revenue was $11.40 billion, up 4.87% year over year and also beating estimates by $208.55 million. Merck & Co., Inc. has also gained 5.48% in the past 6 months.

By the end of the first quarter of 2021, 79 hedge funds out of the 866 tracked by Insider Monkey held stakes in Merck & Co., Inc. worth roughly $6.49 billion. This is compared to 82 hedge funds in the previous quarter with a total stake value of approximately $7.12 billion.

3. Johnson & Johnson (NYSE: JNJ)

Number of Hedge Fund Holders: 81
Dividend Yield: 2.4%

Johnson & Johnson is a healthcare company that works on researching and manufacturing products in the medical field, for sale across the world. The company is also among the few with an effective COVID-19 vaccine being mass-distributed and ranks 3rd on our list of the best blue chip dividend stocks hedge funds are buying.

As of this May, Morgan Stanley holds an Overweight rating on shares of Johnson & Johnson. The firm also holds a price target of about $187, upheld by analyst David Risinger.

In the second quarter of 2021, Johnson & Johnson had an EPS of $2.48, beating estimates by $0.20. The company’s revenue was $23.31 billion, up 27.14% year over year and also beating estimates by $802.29 million. Johnson & Johnson has also gained 4.14% in the past 6 months and 11% year to date.

By the end of the first quarter of 2021, 81 hedge funds out of the 866 tracked by Insider Monkey held stakes in Johnson & Johnson worth roughly $6.91 billion. This is compared to 81 hedge funds in the previous quarter with a total stake value of approximately $5.82 billion.

2. Bristol-Myers Squibb Company (NYSE: BMY)

Number of Hedge Fund Holders: 81
Dividend Yield: 2.9%

Bristol-Myers Squibb Company (NYSE: BMY), a pharmaceutical developing, licensing, and marketing healthcare and biopharmaceutical company, ranks 2nd on our list of the best blue chip dividend stocks hedge funds are buying. The company is based in New York and was founded in 1887.

Bristol-Myers Squibb Company has a Buy rating alongside a $74 price target set on it at Truist, upheld by analyst Robyn Karnauskas as of this July.

In the second quarter of 2021, Bristol-Myers Squibb Company had an EPS of $1.93, beating estimates by $0.03. The company’s revenue was $11.70 billion, up 15.54% year over year and also beating estimates by $474.30 million. Bristol-Myers Squibb Company has also gained 12.3% in the past 6 months and 9.78% year to date.

By the end of the first quarter of 2021, 81 hedge funds out of the 866 tracked by Insider Monkey held stakes in Bristol-Myers Squibb Company worth roughly $5.04 billion. This is compared to 131 hedge funds in the previous quarter with a total stake value of approximately $6.09 billion.

1. JPMorgan Chase & Co. (NYSE: JPM)

Number of Hedge Fund Holders: 111
Dividend Yield: 2.3%

JPMorgan Chase & Co. is next and last on our list of the best blue chip dividend stocks hedge funds are buying and ranks 1st. The company is among the most renowned financial services corporations operating across the globe in the diversified banks industry, and has headquarters in New York.

This July, Credit Suisse raised its price target on shares of JPMorgan Chase & Co.. The new target is up $7 from the previous $170, standing at $177. The firm also holds an Outperform rating on JPMorgan Chase & Co..

In the second quarter of 2021, JPMorgan Chase & Co. had an EPS of $3.78, beating estimates by $0.61. The company’s revenue was $30.48 billion, also beating estimates by $762.45 million. JPMorgan Chase & Co. has also gained 12.65% in the past 6 months and 24.99% year to date.

By the end of the first quarter of 2021, 111 hedge funds out of the 866 tracked by Insider Monkey held stakes in JPMorgan Chase & Co. worth roughly $5.25 billion. This is compared to 112 hedge funds in the previous quarter with a total stake value of approximately $6.97 billion.

You can also take a look at 10 Best Dividend Paying Stocks to Buy Under $50 and 10 Best Dividend Stocks Under $20.

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