15 Best Blue Chip Dividend Stocks To Buy
In this article, we discuss 15 blue chip dividend stocks to buy now. You can skip our detailed analysis of dividend stocks and their performance in the past, and go directly to read 5 Best Blue Chip Dividend Stocks To Buy.
The origin of the term "blue chip" traces back to poker, where the blue chip represents the highest value. In the realm of investing, blue chip stocks are renowned for their high value and are regarded as superior long-term investment options. These stocks have a historical track record of delivering consistent growth in long-term portfolios. The Dow Jones Industrial Average (DJIA) is often considered a blue-chip stocks index. The DJIA is a widely followed stock market index that represents 30 of the largest and most established publicly traded companies in the US. These companies are leaders in their respective industries and are generally considered to be stable, well-established, and financially sound. The index concluded 2023 at an almost unprecedented high, registering an impressive gain of 13%.
When evaluating the performances of the S&P 500 and DJIA, both of which aim to monitor large-cap U.S. companies, historical analysis indicates that while the returns of these two indices have shown a high correlation over time, there have been instances of significant divergence in their performance. According to a report from S&P Dow Jones Indices, the S&P 500 demonstrated a substantial outperformance compared to the DJIA over the one- and three-year periods. However, over the more extended 30-year horizon leading up to 2019, the DJIA slightly outperformed its counterpart. This suggests that while these indices often move in tandem, short-term variations in performance can occur, and the relative strength of each index can be influenced by specific market conditions and economic factors during distinct timeframes.
The report further examined the annual turnover rates for both the S&P 500 and DJIA spanning from 1997 to 2020. Throughout this timeframe, the average turnover rates were relatively comparable, with the S&P 500 registering an average turnover of 4.56%, and the DJIA slightly higher at 5.82%. Turnover rates in this context refer to the percentage of holdings within the indices that are replaced or traded annually. The similarity in average turnover suggests a comparable degree of activity and change in the composition of the two indices over the years. Investors and analysts often use turnover rates to assess the level of trading activity within an index, and the closeness in these figures for the S&P 500 and DJIA implies that, on average, both indices experienced a relatively consistent degree of rebalancing and turnover during the specified period.
One of the key characteristics that set blue chip stocks apart is their ability to generate reliable and steady income for investors. Many blue chip companies have a long-standing tradition of distributing a portion of their profits to shareholders in the form of dividends. Microsoft Corporation (NASDAQ:MSFT), Visa Inc. (NYSE:V), and Apple Inc. (NASDAQ:AAPL) are some of the best blue chip dividend stocks among others that are mentioned below in our list.
Photo by Artem Beliaikin on Unsplash
Our Methodology:
For this list, we began by examining both current and past members of the Dow Jones Industrial Average that boasted a minimum market capitalization of $100 billion as of January 25. From this initial group, we specifically focused on companies that consistently pay dividends to their shareholders. These stocks were then ranked in ascending order of the number of hedge funds having stakes in them at the end of Q3 2023, as per Insider Monkey’s database. Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here).
15. Caterpillar Inc. (NYSE:CAT)
Number of Hedge Fund Holders: 50
Market Cap as of January 25: $148 billion
Caterpillar Inc. (NYSE:CAT) is a multinational corporation that is a leading manufacturer of construction and mining equipment, diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives. In December 2023, the company declared a quarterly dividend of $1.30 per share, which fell in line with its previous dividend. It has been growing its payouts for 29 consecutive years, which makes CAT one of the best dividend stocks on our list. The stock has a dividend yield of 1.79%, as of January 25.
At the end of Q3 2023, 50 hedge funds tracked by Insider Monkey reported having stakes in Caterpillar Inc. (NYSE:CAT), which remained unchanged from the previous quarter. These stakes have a total value of roughly $6 billion. With roughly 8 million shares, Fisher Asset Management was the company's leading stakeholder in Q3.
14. AT&T Inc. (NYSE:T)
Number of Hedge Fund Holders: 52
Market Cap as of January 25: $119.2 billion
AT&T Inc. (NYSE:T) is a large American multinational telecommunications conglomerate with a diverse range of services. It is one of the best dividend stocks on our list as the company has been paying regular dividends to shareholders since 1995. The company currently offers a quarterly dividend of $0.2775 per share and has a dividend yield of 6.65%, as of January 25. In addition to a strong dividend history, the company has also shown a strong cash position in the most recent quarter. In Q3 2023, its operating cash flow came in at $10.3 billion and it generated over $1.3 billion in free cash flow.
As of the close of Q3 2023, 52 hedge funds in Insider Monkey's database owned stakes in AT&T Inc. (NYSE:T), compared with 56 in the preceding quarter. These stakes are valued at more than $1.7 billion in total.
13. International Business Machines Corporation (NYSE:IBM)
Number of Hedge Fund Holders: 53
Market Cap as of January 25: $158.8 billion
International Business Machines Corporation (NYSE:IBM) is a global tech and consulting company. It is one of the oldest and most well-known technology companies, and it has played a significant role in the development of computing and information technology. The company was a part of 53 hedge fund portfolios at the end of Q3 2023, up from 51 in the previous quarter, according to Insider Monkey's database. The stakes owned by these hedge funds have a collective value of over $843 million.
International Business Machines Corporation (NYSE:IBM) has been rewarding shareholders with growing dividends for the past 28 consecutive years. Its current quarterly dividend comes in at $1.66 per share. With a dividend yield of 3.82%, as of January 25, IBM is one of the best dividend stocks on our list.
12. The Goldman Sachs Group, Inc. (NYSE:GS)
Number of Hedge Fund Holders: 68
Market Cap as of January 25: $123.7 billion
The Goldman Sachs Group, Inc. (NYSE:GS) is an American investment banking, securities, and investment management firm. The company offers a quarterly dividend of $2.75 per share and has a dividend yield of 2.90%, as recorded on January 25. It has always remained committed to its shareholder obligation as the company returned $937 million to shareholders through dividends in the third quarter of 2023.
According to Insider Monkey's database of Q3 2023, 68 hedge funds held stakes in The Goldman Sachs Group, Inc. (NYSE:GS), down slightly from 70 in the previous quarter. The total value of these stakes is over $5.11 billion. With over 5.3 million shares, Fisher Asset Management was the company's leading stakeholder in Q3.
11. McDonald's Corporation (NYSE:MCD)
Number of Hedge Fund Holders: 70
Market Cap as of January 25: $218 billion
McDonald's Corporation (NYSE:MCD) is a global fast-food restaurant chain that operates one of the most recognizable and widespread fast-food service systems in the world. In 2023, the company achieved its 47th consecutive year of dividend growth and it currently pays a quarterly dividend of $1.67 per share. The stock's dividend yield on January 25 came in at 2.22%.
Insider Monkey's database of Q3 2023 indicated that 70 hedge funds held stakes in McDonald's Corporation (NYSE:MCD), up from 68 in the preceding quarter. The overall value of these stakes is more than $2.5 billion.
10. Chevron Corporation (NYSE:CVX)
Number of Hedge Fund Holders: 72
Market Cap as of January 25: $273.5 billion
An American multinational energy company, Chevron Corporation (NYSE:CVX) is next on our list of the best dividend stocks. The company's dividend growth streak spans over 36 years and it offers a quarterly dividend of $1.51 per share. During the third quarter of 2023, it returned nearly $3 billion to shareholders through dividends. The stock has a dividend yield of 4.17%, as of January 25.
As of the close of Q3 2023, 72 hedge funds in Insider Monkey's database owned stakes in Chevron Corporation (NYSE:CVX), compared with 73 a quarter earlier. The total value of these investments is over $21.4 billion. Among these hedge funds, Warren Buffett's Berkshire Hathaway was the company's leading stakeholder in Q3.
9. Pfizer Inc. (NYSE:PFE)
Number of Hedge Fund Holders: 73
Market Cap as of January 25: $160 billion
Pfizer Inc. (NYSE:PFE) is a global pharmaceutical company that is involved in the research, development, manufacturing, and marketing of a wide range of prescription drugs and vaccines. The company not only has a 34-year run of paying regular dividends to shareholders, but it has also been growing its payouts for 14 consecutive years. which makes PFE one of the best dividend stocks on our list. It pays a per-share dividend of $1.42 every quarter and has a dividend yield of 5.93%, as of January 25.
Of the 910 hedge funds tracked by Insider Monkey at the end of Q3 2023, 73 funds owned stakes in Pfizer Inc. (NYSE:PFE), the same as in the previous quarter. These stakes are collectively valued at over $2.4 billion. Ken Griffin and D. E. Shaw were two of the company's most prominent shareholders.
8. American Express Company (NYSE:AXP)
Number of Hedge Fund Holders: 74
Market Cap as of January 25: $135.4 billion
American Express Company (NYSE:AXP) is a global financial services company that provides a variety of products and services. The company is best known for its charge cards and credit cards. It has paid regular dividends to shareholders for the past 34 years and its quarterly dividend stands at $0.60 per share. With a dividend yield of 1.29% as of January 25, AXP is one of the best dividend stocks on our list.
Warren Buffett's Berkshire Hathaway owned the leading stake in American Express Company (NYSE:AXP) worth over $22.6 billion in the third quarter of 2023. Overall, 74 hedge funds owned investments in the company in Q3, worth over $25.6 billion in total.
7. General Electric Company (NYSE:GE)
Number of Hedge Fund Holders: 76
Market Cap as of January 25: $141.4 billion
General Electric Company (NYSE:GE) is a diversified global conglomerate with interests in various industrial sectors. On December 15, 2023, the company declared a quarterly dividend of $0.08 per share, which was in line with its previous dividend. As of January 25, the stock has a dividend yield of 0.25%. The company's cash position for the fourth quarter of 2023 remained strong as it generated $3.2 billion in operating cash flow and its free cash flow for the period came in at $3 billion.
The number of hedge funds owning stakes in General Electric Company (NYSE:GE) grew to 76 in Q3 2023, up from 71 in the previous quarter, as per Insider Monkey's database. These stakes have a total value of more than $10.3 billion.
6. Citigroup Inc. (NYSE:C)
Number of Hedge Fund Holders: 79
Market Cap as of January 25: $101.3 billion
Citigroup Inc. (NYSE:C) ranks sixth on our list of the best dividend stocks. The global financial services company declared a quarterly dividend of $0.53 a share on January 12, which was consistent with its previous dividend. It has been paying uninterrupted dividends to shareholders since 1990. The stock has a dividend yield of 3.98%, as of January 25.
As of the end of September 2023, 79 hedge funds tracked by Insider Monkey reported owning stakes in Citigroup Inc. (NYSE:C), growing from 75 in the previous quarter. The consolidated value of these stakes is nearly $7 billion. Warren Buffett and Ken Fisher were the company's most prominent stakeholders in Q3.
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Disclosure. None. 15 Best Blue Chip Dividend Stocks To Buy is originally published on Insider Monkey.