Updated on July 23, 2024
This article explores the best blue-chip stocks that pay dividends for investors looking to both diversify and shore up their portfolios. Blue-chip stocks are shares of large-cap companies with excellent reputations and profitability. These are typically the crème of any industry, with revenues that could rival the GDPs of some developing countries.
The stock market experienced a sharp decline as investors and economists continued to worry about the looming possibility of a recession. According to a Wall Street survey, 63% of economists anticipate a deep recession in the next 12 months- an increase from July’s 49%.
In turbulent economic times, investors often look for safe investments to park their money while waiting out the storm. Blue-chip stocks provide the perfect avenue since they offer stable dividends and are usually protected from economic shifts. Here are some blue-chip stocks that pay dividends:
Mastercard Incorporated (ticker: MA)
This American multinational financial services company provides finance-related services to its customers worldwide. In November, one analyst maintained a Buy rating for the stock, with an accompanying price target of $380.
In addition, the company reported earnings of $5.8 billion in Q3 2022, a 15.5% increase from last year’s period. The company repurchased shares worth over $1.6 billion and paid a whopping dividend payment of $474 million to shareholders.
Mastercard has been gradually increasing dividend payouts for the past eight years. The company currently pays out a quarterly dividend of roughly $0.49 per share and a dividend yield of 0.58%.
Apple Inc. (ticker: AAPL)
This multinational tech giant is another company that pays dividends to shareholders. The company has consistently made dividend payouts for the past nine years. The company currently offers a dividend of $0.22 every quarter and a dividend yield of 0.62%.
The company’s Q3 2022 earnings saw it report an operating cash flow of $23 billion, generating $20.7 billion in free cash flow. The company paid out $20 billion in dividend payments owing to its hefty cash flow.
The price target on Apple was raised to $190 by Everscore ISI, with a matching Outperform rating on the shares. With its stellar performance and loyal customer base, Apple is a great candidate for the company to invest in.
Nordson Corporation (ticker: NDSN)
This multinational corporation designs equipment for consumer and industrial coatings, adhesives, and sealants. Analysts have raised its price target to $271 and added an Outperform rating on its shares. This represents an endorsement of the company’s products and its strong demand.
Nordson currently pays a quarterly dividend of $0.65 per share. 2022 saw the company extend its dividend growth streak by 59 years, making it one of the best companies on this list. By November 21, the stock had a dividend yield of 1.12%.
The company reported earnings of $662 million for its Q3 2022. By the end of the quarter, the company reported over $128.7 million in available cash and cash equivalents, as well as total current assets of over $1.1 billion.
Microsoft Corporation (ticker: MSFT)
As one of the leading tech companies in the world, it’s no surprise that Microsoft made the list. The company declared a 20% increase in its quarterly dividend to $0.68 a share. This announcement marked the company’s 16th consecutive year of dividend growth.
For its fiscal Q1 2023, Microsoft Corporation reported earnings of $50 billion, representing a 10.6% growth from the previous year’s period. The company reported operating cash flows of $23 billion and paid out $9.7 billion in dividends and share repurchases to shareholders.
RBC awarded Microsoft an Outperform rating and set a $310 price target owing the company’s Q1 2023 results.
UnitedHealth Group Incorporated (ticker: UNH)
This is an American multinational that specializes in managed healthcare and insurance. The company declared a quarterly dividend of roughly $1.65 per share and has been paying shareholders dividends since 1990. Dividend payments were initially paid annually but have recently shifted to quarterly payments. Its stock dividend yield on November 21 stood at 1.27%.
In October, the company’s stock price target was raised to $615 with a Buy rating on its shares by Deutsche bank. For its Q3 2022, UnitedHealth Group declared $18.5 billion in operating cashflow, and its adjusted cash flow from operations stood at $8.8 billion.
Within the first 9 months of the financial year, the company returned $10.5 billion to its shareholders through share repurchases and dividends making it a top stock on this list.
Nike Inc. (ticker: NKE)
Nike manufactures footwear, apparel, accessories, and other sporting equipment. This multinational company is arguably one of the most valuable brands in the world. The company has consistently remained committed to its shareholder return, and in Q3 2022, it paid $480 million in dividends. An 11% increase from the same period last year. Additionally, the company repurchased shares worth $1 billion during the quarter.
On November 15, Nike declared an impressive quarterly dividend of $0.34 per share after raising it by 12%. The stock dividend yield for the year stood at 13.1%. Raymond James awarded the company an Outperform rating and was cited as an excellent stock for long-term investment.
Walmart Inc. (ticker: WMT)
An American multinational retail company, this is added to the list as one of the best dividend-paying companies. For its Q3 2022, the company reported revenue totaling $152.8 billion, indicating an 8.8% growth from this period last year. So far, the company has generated $15.7 billion in operating cash flow as well as $3.6 billion in free cash flow. Astounding is the fact that its cash generation was sufficient to pay off its dividend payments worth $1.5 billion.
Walmart’s quarterly dividend currently stands at $0.56 per share, with a dividend yield of 1.48% by November 21. Morgan Stanley increased its price target to $164 and gave its shares an Overweight rating.
Accenture Plc (ticker: ACN)
This Irish-American information technology company specializes mainly in information technology services and consulting. The company posted revenue worth $15.4 billion, representing a 14.9% growth from the same time last year. It reported a free cash flow in the quarter of $3.6 billion, and its operating cash flow stood at $3.8 billion. The company’s cash flow was more than sufficient to cover its quarterly dividend payments, which amounted to $614 million.
In September, the company announced a 15.5% increase in its quarterly dividend to shareholders standing at $1.12 per share. Its stock has a dividend yield of 1.56%, according to records on November 21.
JP Morgan awarded an Overweight rating on the stock and a price target of $306, showing an appreciation of the company’s fundamentals and its business model in the current economic environment.
Parker-Hannifin Corporation (ticker: PH)
This Ohio-based company specializes in motion and control technologies. It reported a revenue of $42.23 billion, an increase from the 12.5% reported in the same period last year. The company’s year-to-date operating cash flow stood at $457.4 million, an increase from last year’s $424.2 million.
This company holds one of the longest-known track records on dividend payments in the S&P 500. It has consistently increased its dividend payouts for close to 66 years, making it one of the stars on this list. Currently, the company pays a quarterly dividend of $1.33 per share, with a dividend yield of 1.74%.
Citigroup recently resumed its stock coverage and awarded it a Neutral rating, owing to the growing demand for technology products.
As seen from the list above, there are quite a few companies investors can turn to when interested in blue-chips that pay dividends. Companies such as Mastercard, Apple, Nike, Walmart, and others offer investors a unique opportunity to earn a regular income while hedging their portfolios against risk.
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