High dividend blue chip stocks give you exposure to industry leaders while providing you with steady and predictable returns. Check out our picks for the high dividend blue-chip stocks to invest in and our guide for choosing the best blue-chip stocks and balancing your portfolio.
Our Picks For High Dividend Blue Chip Stocks
Investing in blue-chip stocks allows you to get exposure to industry leaders. These stocks are typically seen as safe since these companies are well-established and will deliver slow and steady returns over the years. However, returns can be too low to make blue-chip stocks interesting. We have selected some of the best high dividend blue chip stocks, so you can take few risks while benefiting from interesting returns.
How We Chose Our Ratings
We looked at a few factors to select the best blue-chip stocks to invest in:
We tried to include stocks from several industries to help you build a diversified portfolio.
We selected stocks currently available at an interesting price given their recent pricing history.
We chose stocks with a high dividend yield and also asked ourselves how this dividend yield is likely to evolve in the future.
We did some research on the company’s history and on what analysts predict for the future.
Potential for growth
We also assessed the growth potential of the stocks we selected.
Top Five High Divided Blue Chip Stocks
These are the high divided blue chip stocks you should consider investing in. These five stocks will give you exposure to five different industries while providing interesting returns and have a real potential for growth in the future.
The AT&T stock is currently trading at a little over $30 a share, and the dividend yield is above 6 percent. AT&T is one of the top providers of cable TV in the U.S. and South America.
The company has plans to upgrade its 4G LTE network to a 5G network and is also moving towards offering more cloud solutions to businesses. This new network will drive growth in combination with new business services.
It is true that cable services are struggling due to online streaming services, but AT&T also offers Internet services. The company’s activities are diverse enough to counteract the negative impact online streaming services have on cable subscriptions.
Purchasing shares of AT&T now is interesting since you can buy a share for around $30 while this stock was valued at almost $40 back in October 2017.
IBM is a company that most investors want to avoid due to its recent history. IBM’s focus on the personal computer market didn’t pay off and the company had to sell some of its brands, such as the ThinkPad line.
However, IBM is bouncing back. It is a well-established company in the tech field, and the Watson line of products is something you will want to get exposure to.
Alphabet and Amazon are other options to consider if you want blue-chip stocks in the tech field. In fact, Alphabet and Amazon have more market shares than IBM when it comes to cloud services. However, an Alphabet share will currently cost you around $1,140, and you will need $1,690 to buy a share of Amazon.
Note that Alphabet and Amazon currently don’t offer any dividends. This is what makes IBM a more attractive blue-chip tech stock. This stock is valued at $144 and you will get a dividend yield of more than 4 percent.
If you want another blue-chip tech stock in the same price range, you can buy a share of Microsoft for around $100. However, dividends are much lower than IBM.
IBM isn’t a risk-free investment due to the company’s past struggles. Recent performances have been positive, and IBM has an interesting portfolio of products between its hybrid cloud services, blockchain solutions, and machine learning technology.
In the end, IBM is still a strong competitor, and the Watson AI could be what sets this company apart from other blue-chip tech stocks.
Ford is an obvious choice if you want to invest in the automotive field. You can invest in this stock for as little as $12 and will get a dividend yield of 5 percent.
Now is the perfect time to invest in Ford since you can get a share of this company for $12 while the average price has been fluctuating between $15 and $17 over the past year.
Analysts give excellent ratings to this stock. In fact, Morgan Stanley analysts believe this stock could increase by as much as 40 percent in 2019.
Ford has a significant percentage of market shares with the F-150 being the best-selling picking truck in the U.S. Even though the company’s balance sheet shows a significant debt, you have to keep in mind that automotive companies aren’t in risk when debt levels get high since most of this debt comes from vehicle sales financing.
The Ford stock has been performing below its usual average because of poor auto sales. Higher interest rates aren’t helping this industry at the moment.
However, it is likely that this industry will benefit from deregulation policies. It is also likely that Ford and other manufacturers will diversify their activities and start producing more parts in U.S. factories once the NAFTA Trade Deal is renegotiated.
Ford might not seem like a good buy at the moment because of poor auto sales, but this trend could change in the future. The value of this company will also increase as auto manufacturers develop new tools to collect data. The datasets generated from Ford vehicles after they are sold will become a valuable asset for this company and increase its value.
Eli Lilly Stock
Eli Lilly is not as well-known as other big pharma companies like Pfizer or Johnson & Johnson. However, this company has an $81 billion market value. The Eli Lilly stock currently sells for $85, which is as high as it has been over the past five years.
You will get a dividend yield of 2.6 percent, which isn’t as high as what other companies offer. However, there are some arguments in favor of purchasing Eli Lilly stock now.
Eli Lilly is an excellent investment thanks to the company’s solid portfolio of diabetes drugs that will continue to be in high demand. The company also released new promising cancer treatments, including Cyramza and Verzenio.
Now is the perfect time to invest in the big pharma sector. These companies are taking advantage of the Tax Cuts & Jobs Act to bring back the money they had overseas with a one-time charge instead of the old 35 percent tax.
Eli Lilly’s portfolio is going to continue growing as the company brings back the $9.8 billion kept overseas and uses this money to take over smaller pharma and biotech companies with promising products.
Eli Lilly won’t be the only big pharma company to use this strategy, but most investors will probably focus on the more obvious high-quality stocks in this field, such as Pfizer, Merck & Co, and Johnson & Johnson.
Keep in mind that there are some risks involved with this investment since there is no guarantee that Eli Lilly will pick a winning acquisition strategy.
Investing in Starbucks is somewhat of a risky position, but this is a decision that could pay off in the long-run. Analysts have been downgrading this stock due to slow growth, and Starbucks CEO Howard Schultz recently announced that he was resigning.
You can currently purchase a share of Starbucks for $56, which is almost $10 less than what the stock cost a year ago. You will get a dividend yield that is a little over 2 percent.
Starbucks isn’t the most attractive blue-chip stock right now, but the coffee shop chain could bounce back and make this investment worth it. Now is the perfect time to get a good price of Starbucks stocks. Kevin Johnson is taking over as Starbucks CEO, and investors are likely to shy away from this stock until a new growth strategy is announced and financial data shows improvement.
Starbucks is likely to bounce back since the coffee shop chain has a strong existing infrastructure to rely on with more than 26,000 locations in the U.S. and unmatched brand loyalty.
Buyer’s Guide For Picking High Dividend Blue Chip Stocks
There are a few things you should keep in mind when investing in blue-chip stocks. Here is how you can pick the right stocks for your portfolio.
Why Invest In Blue-Chip Stocks?
These companies are typically industry leaders. There are different definitions of blue chip, but these companies are usually regarded as a safe investment.
You can invest in blue-chip stocks to mitigate the risks you are taking with another portion of your portfolio, or to get exposure to a specific industry by investing in the top three or top five companies in the field. These companies have usually been around for decades and own significant market shares.
Blue-chip companies typically dominate their industry and diversify their activities.
You can look at the market cap and company value to determine if a stock is a blu- chip stock. You can also choose to focus on the companies that make up the Dow Jones and S&P 500 indexes.
It is important to decide how you will define blue-chip stocks so you can make a list of criteria to select the stocks you want to invest in.
Why Invest In High Dividend Stocks?
A dividend is a payment made a company to its shareholders. It can either be a cash payout, or a stock payout that will reward you with more shares of the company.
The dividend yield can be high to attract investors, but some companies choose to pay small dividends or to withhold dividends for a while to have more money available for investments.
Stocks with high dividends are an attractive option because your portfolio will generate predictable revenues. However, keep in mind that companies that favor high dividends over investing in growth strategies might not be able to keep up with competitors who are advocating more resources to growth.
Ideally, your portfolio should include a mixture of high dividend stocks as well as shares of companies that focus on investments that will produce growth.
Assess Your Risks
Investing in a blue-chip company carries fewer risks than purchasing shares of a small company. However, it is important not to approach these investments as being risk-free.
Here are some of the risks associated with high dividend blue chip stocks:
- High dividends mean there is less capital available to reinvest, and competitors could perform better.
- A large company can fail to keep up with a changing industry, or the entire industry can become obsolete.
- A large company’s business model can become outdated.
- There are external risks to take into consideration, such as natural disasters or new regulations.
- The headline risks shouldn’t be neglected. A negative story involving a large company is likely to receive a lot of coverage. Blue-chip companies may or may not recover from a PR crisis.
High dividend blue chip stocks aren’t risk-free, but these stocks are less volatile than other products. The key to avoiding unnecessary risks is to diversify your portfolio. You should ideally pick stocks that will give you exposure to different industries and should invest in companies with different market caps.
Take the time to research the blue-chip companies you want to invest in. Look for companies with strong leadership and a detailed plan for growth in the future. It is worth it to sacrifice high dividends now in favor of strong growth in the future.
The five stocks listed above are a great place to start if you want to add blue-chip companies to your portfolio. However, there are many other options to explore. Think about diversifying with funds that give you exposure to the Dow Jones and S&P 500 index, and explore blue-chip stocks in industries other than the ones we mentioned.