Key Points

• The stock market is overbought, and investors should tread carefully now.
• Blue Chip dividend stocks offer growth and income possibilities.
• The key to investing success is a well-rounded portfolio. A qualified financial advisor can help with stock selection. Click here to get in touch with one.

Dividend stocks are a favorite among investors for good reason. They provide a steady income stream of passive income and offer a promising avenue for total return. Total return, a comprehensive measure of investment performance, encompasses interest, capital gains, dividends, and distributions realized over time. 

Let’s take a closer look at the concept of total return. Imagine you purchase a stock at $20 that offers a 3% dividend. If the stock price rises to $22 within a year, your total return is 13%. This is calculated by adding the 10% increase in stock price to the 3% dividend. 

All the major Wall Street firms we cover here at 24/7 Wall St. have a list of the top stock picks for their institutional and retail clients to invest in. Typically, these are companies that analysts have an incredible amount of conviction in and feel strongly about their fundamentals and forward prospects. In addition, they often have good upside to the assigned price target and are bestowed with either a Buy or Overweight rating, depending on the company providing the coverage.

Wells Fargo Investment Institute analysts recently updated its “focus list” of stocks. These companies are the top picks from the firms’ Global Investment Strategy and Global Securities Research analysis group that are expected to exceed the total return of the S&P 500 over the next 12 months. At 24/7 Wall St., we like to cover these top stocks and then screen the companies, looking for those paying the highest dividends to investors. This can increase the total return potential for investors.

Why do we cover dividend stocks?

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.

Broadcom

This stock has been on fire and offers a 1.30% dividend. Broadcom Inc. (NASDAQ: AVGO) designs, develops, and supplies various semiconductor devices, focusing on complex digital and mixed-signal complementary metal oxide semiconductor-based devices and analog III-V-based products worldwide.

The company operates in two segments:

• Semiconductor Solutions
• Infrastructure Software

Broadcom provides:

• Set-top box system-on-chips (SoCs), cable, digital subscriber line, and passive optical networking central office/consumer premise equipment SoCs, wireless local area network access point SoCs
• Ethernet switching and routing custom silicon solutions, serializer/deserializer application-specific integrated circuits
• Optical and copper, and physical layer devices, and fiber optic components and RF semiconductor devices

The company also offers:

• RF front-end modules and filter
• Wi-Fi, Bluetooth, and global positioning system/global navigation satellite system SoCs; custom touch controllers
• Inductive charging; attached small computer system interface; and redundant array of independent disks controllers and adapters; peripheral component interconnect express
• Fiber channel host bus adapters; read channel based SoCs; custom flash controllers; preamplifiers; optocouplers, industrial fiber optics, and motion control encoders and subsystems; light emitting diode, ethernet PHYs, switch ICs, and camera microcontrollers

Its products are used in various applications, including enterprise and data center networking, home connectivity, set-top boxes, broadband access, telecommunication equipment, smartphones and base stations, data center servers and storage systems, factory automation, power generation and alternative energy systems, and electronic displays.

Chevron

This integrated giant is a safer idea for investors looking to position themselves in the energy sector and pays a hefty 4.04% dividend. Chevron Corp. (NYSE: CVX) engages in integrated energy and chemicals operations worldwide through its subsidiaries. The company operates in two segments.

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; and transportation, storage
• Marketing of natural gas, as well as operating a gas-to-liquids plant

The Downstream segment engages in:

• Refining crude oil into petroleum products
• Marketing crude oil, refined products, and lubricants
• Manufacturing and marketing renewable fuels
• Transporting crude oil and refined 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

It also involved in cash management, debt financing, insurance operations, real estate, and technology businesses.

Chevron announced last fall that it has entered into a definitive agreement with Hess Corp. (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.

JPMorgan

This stock trades at a still reasonable 13.4 times estimated 2024 earnings and pays a 2.05% dividend. JPMorgan Chase & Co. (NYSE: JPM) is one of the leading global financial services firms and one of the largest banking institutions in the United States, with about $3.9 trillion in assets. The company was formed by merging retail bank Chase Manhattan and investment bank J.P. Morgan.

The company operates through four segments:

• Consumer & Community Banking (CCB)
• Corporate & Investment Bank (CIB)
• Commercial Banking (CB)
• Asset & Wealth Management (AWM).

The CCB segment offers:

• Deposit, investment and lending products
• Cash management and payments and services
• Mortgage origination and servicing activities
• Residential mortgages and home equity loans
• Credit cards, auto loans, leases, and travel services to consumers and small businesses through bank branches, ATMs, and digital and telephone banking.

The CIB segment provides:

• Investment banking products and services, including corporate strategy and structure advisory, and equity and debt market capital-raising services
• Loan origination and syndication, payments, cash and derivative instruments, risk management solutions, prime brokerage, and research

This segment also offers securities services, including custody, fund accounting and administration, and securities lending products for asset managers, insurance companies, and public and private investment funds.

The CB segment provides financial solutions, including lending, payments, investment banking, and asset management to small and midsized companies, local governments, nonprofit clients, and large corporations, as well as investors, developers, and owners of multifamily, office, retail, industrial, and affordable housing properties.

The AWM segment offers multi-asset investment management solutions in equities, fixed income, alternatives, and money market funds to institutional clients and retail investors; and retirement products and services, brokerage, custody, estate planning, lending, deposits, and investment management products to high-net-worth clients.

TJX Companies

Wall Street loves this off-price retailer that pays a solid 1.25% dividend. TJX Companies Inc. (NYSE: TJX) sells off-price apparel and home fashions through four segments:

• Marmaxx
• HomeGoods
• TJX Canada
• TJX International

The company sells family apparel, including:

• Footwear and accessories
• Home fashions, such as home basics, furniture, rugs, lighting products
• Giftware
• Soft home products
• Decorative accessories
• Tabletop, and cookware
• Expanded pet, kids, and gourmet food departments
• Jewelry and accessories; and other merchandise.

At the end of fiscal 2023, the company had over 4,800 stores. The company’s business spans nine countries and three continents and includes six branded e-commerce sites.

TJX Companies operate:

• T.J. Maxx and Marshalls (combined, Marmaxx)
• HomeGoods
• Sierra, and Homesense in the U.S.
• Winners HomeSense, and Marshalls (combined, TJX Canada) in Canada
• T.K. Maxx in the United Kingdom, Ireland, Germany, Poland, Austria, the Netherlands, and Australia
• HomeSense in the U.K. and Ireland

Williams Companies

Paying a rich 3.35% dividend, this energy leader offers solid value at current trading levels. Williams Companies Inc. (NYSE: WMB) and its subsidiaries operate as an energy infrastructure company primarily in the United States.

It operates through:

• Transmission & Gulf of Mexico
• Northeast G&P
• West
• Gas & NGL Marketing Services segments

The Transmission & Gulf of Mexico segment comprises natural gas pipelines, Transco, Northwest pipeline, MountainWest, and related natural gas storage facilities, natural gas gathering and processing, and crude oil production handling and transportation assets in the Gulf Coast region.

The Northeast G&P segment engages in midstream gathering, processing, and fractionation activities in the Marcellus Shale region, primarily in Pennsylvania and New York and the Utica Shale region of eastern Ohio.

The West segment consists of:

• Gas gathering, processing, and treating operations in the Rocky Mountain region of Colorado and Wyoming
• The Barnett Shale region of north-central Texas
• The Eagle Ford Shale region of South Texas
• The Haynesville Shale region of northwest Louisiana
• The Mid-Continent region that includes the Anadarko and Permian basins, and the DJ Basin of Colorado
• Operates natural gas liquid (NGL) fractionation and storage facilities in central Kansas near Conway.

The Gas & NGL Marketing Services segment provides wholesale marketing, trading, storage, and transportation of natural gas for natural gas utilities, municipalities, power generators, and producers; asset management services; and transports and markets NGLs.

Williams Companies owns and operates 33,000 miles of pipelines.

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