Since 1926, dividends have contributed approximately 32% of the total return for the S&P 500, while capital appreciations have contributed 68%. Therefore, sustainable dividend income and capital appreciation potential are essential for total return expectations.
A recent study from Hartford Funds, in collaboration with Ned Davis Research, found that dividend stocks delivered an annualized return of 9.18% over the past half-century (1973-2023). Over the same timeline, this was more than double the annualized return for non-payers (3.95%).
The big question for investors now is where to go from here. After an incredible 2023 that saw massive gains for both the Nasdaq and the S&P 500, all major indices are higher as we finish the first quarter of 2024. The S&P 500 and the Nasdaq indices have added 10%, while the Dow Jones Industrials are up 5%. While Artificial Intelligence mania has driven much of the upside, the reality is the market is overbought and feels heavy.
Nvidia Inc. (NASDAQ: NVDA | NVDA Price Prediction) and other top tech names have driven the lion’s shares of the gains. Still, volatility is taking its toll on some of the biggest names, and the tailwind behind the Magnificent 7 may be poised to turn into a headwind. For investors looking to stay invested and generate passive income, moving to blue-chip sector leaders that pay dependable and safe dividends makes sense.
We screened our 24/7 Wall St. blue chip dividend stock research database, looking for companies that offer big dividends and a degree of safety for concerned investors. We found six incredible stocks that look like outstanding ideas now, and all are rated Buy by top Wall Street firms.
AT&T
AT&T is the world’s fourth-largest telecommunications company by revenue and the largest wireless carrier in the United States.
The legacy telecommunications company has been going through a lengthy restructuring while lowering the dividend, which still stands at a rich 6.54%. AT&T, Inc. (NYSE: T) provides worldwide telecommunications, media, and technology services.
Its Communications segment offers wireless voice and data communications services.
AT&T sells through its company-owned stores, agents, and third-party retail stores:
- Handsets
- Wireless data cards
- Wireless computing devices
- Carrying cases
- Hands-free devices
AT&T also provides:
- Data
- Voice
- Security
- Cloud solutions
- Outsourcing
- Managed and professional services
- Customer premises equipment for multinational corporations, small and mid-sized businesses, and governmental and wholesale customers.
In addition, this segment offers residential customers broadband fiber and legacy telephony voice communication services.
It markets its communications services and products under :
- AT&T
- Cricket
- AT&T PREPAID
- AT&T Fiber
The company’s Latin America segment provides wireless services in Mexico and video services in Latin America. This segment markets its services and products under the AT&T and Unefon brands.
Chevron
Chevron is the second-largest direct descendant of Standard Oil, and originally known as the Standard Oil Company of California.
This integrated giant is a safer way for investors looking to position themselves in the energy sector. It pays a rich 4.22% dividend, and Buffett added 16 million shares in the first quarter. Chevron Corporation (NYSE: CVX) engages in integrated energy and chemicals operations worldwide through its subsidiaries.
The company operates in two segments:
- Upstream
- Downstream
The Upstream segment is involved in the following:
- Exploration, development, production, and transportation of crude oil and natural gas;
- Processing, liquefaction, transportation, and regasification associated with liquefied natural gas
- Transportation of crude oil through pipelines
- Transportation, storage, and marketing of natural gas, as well as operating a gas-to-liquids plant
The Downstream segment engages in:
- Refining crude oil into petroleum product
- Marketing crude oil, refined products, and lubricants
- Manufacturing and marketing renewable fuels
- Transporting crude oil and advanced products by pipeline, marine vessel, motor equipment, and rail car
- Manufacturing and marketing of commodity petrochemicals, plastics for industrial uses, and fuel and lubricant additives
Chevron announced in the fall that it has entered into a definitive agreement with Hess Corporation (NYSE: HES) to acquire all of the outstanding shares of Hess in an all-stock transaction valued at $53 billion, or $171 per share based on Chevron’s closing price on October 20, 2023. Under the terms of the agreement, Hess shareholders will receive 1.0250 shares of Chevron for each Hess share. The transaction’s total enterprise value, including debt, is $60 billion.
Berkshire Hathaway owns 6.8% of Chevron’s outstanding stock with 126,093,326 shares, and the energy giant makes up 5.1% of the portfolio.
Kenvue
Kenvue markets well-known brands such as Aveeno, Band-Aid, Benadryl, Zyrtec, Johnson’s, Listerine, Mylanta, Neutrogena, Tylenol, and Visine.
Spun off from Johnson & Johnson, Inc. (NYSE: JNJ) last year, this potential total return home run pays a solid 3.88% dividend. Kenvue Inc. (NYSE: KVUE) is a global consumer health company.
The company operates through three segments:
- Self Care
- Skin Health and Beauty
- Essential Health
The self-care segment offers cough, cold, and allergy pain care, digestive health, smoking cessation, and other products under:
- Tylenol,
- Nicorette
- Zyrtec brands.
The Skin Health and Beauty segment provides face and body care, hair care, sun care, and other products under:
- Neutrogena
- Aveeno
- OGX brand names.
The Essential Health segment offers oral and baby, women’s health, and wound care products under:
- Listerine
- Johnson’s
- Band-Aid
- Stayfree brands
Pfizer
Pfizer is an American multinational pharmaceutical and biotechnology corporation headquartered at The Spiral in Manhattan, New York City.
This top pharmaceutical stock was a massive winner in the COVID-19 vaccine sweepstakes but has been crushed as many are not getting boosters. Pfizer Inc. (NYSE: PFE) discovers, develops, manufactures, markets, distributes, and sells biopharmaceutical products worldwide and pays a hefty 6.14% dividend, which has risen yearly for the last 14 years.
The company offers medicines and vaccines in various therapeutic areas, including:
- Cardiovascular metabolic and women’s health under the Premarin family and Eliquis brands
- Biologics, small molecules, immunotherapies, and biosimilars under the Ibrance, Xtandi, Sutent, Inlyta, Retacrit, Lorbrena, and Braftovi brands
- Sterile injectable and anti-infective medicines and oral COVID-19 treatment under the Sulperazon, Medrol, Zavicefta, Zithromax, Vfend, Panzyga, and Paxlovid brands.
Pfizer also provides medicines and vaccines in various therapeutic areas, such as:
- Pneumococcal disease, meningococcal disease, tick-borne encephalitis
- COVID-19 under the Comirnaty/BNT162b2, Nimenrix, FSME/IMMUN-TicoVac, Trumenba, and the Prevnar family brands
- Biosimilars for chronic immune and inflammatory diseases under the Xeljanz, Enbrel, Inflectra, Eucrisa/Staquis, and Cibinqo brands
- Amyloidosis, hemophilia, and endocrine diseases under the Vyndaqel/Vyndamax, BeneFIX, and Genotropin brands
Philip Morris International
Philip Morris International Inc. is an American multinational tobacco company, with products sold in over 180 countries.
This company has continued to grow its global market share and pays a fat 5.72% dividend. Philip Morris International Inc. (NYSE: PM) is one of the largest international cigarette producers, with a share of 28% of the global cigarette/heated tobacco market.
Key combustible brands include:
- Marlboro
- Parliament
- L&M
The company is commercializing IQOS, a heat-not-burn product, in over 40 markets, which could drive earnings in the future. Most on Wall Street believe Philip Morris International offers superior underlying growth prospects, both near-term and long-term.
Plains All American Pipeline
This top MLP is engaged in pipeline transport, marketing, and storage of liquefied petroleum gas and petroleum in the United States and Canada.
This stock has been locked in a tight trading range, looks ready to break out, and pays a huge 7.42% dividend. Plains All American Pipeline, L.P. (NYSE: PAA), through its subsidiaries, transports, terminals, stores, and gathers crude oil and natural gas liquids (NGL) in the United States and Canada through pipelines.
The company operates in two segments:
- Crude Oil
- Natural Gas Liquids (NGL)
The Crude Oil segment offers:
- Gathering and transporting crude oil through pipelines
- Gathering systems,
- Trucks, barges, or railcars
- This segment provides terminalling, storage, and other facilities-related services and merchant activities
The Natural Gas Liquids segment provides:
- Gathering
- Fractionation
- Storage
- Transportation
- Terminalling activities
- This segment also involves ethane, propane, normal butane, iso-butane, natural gasoline, and crude oil refining processes.
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