In this article, we discuss 10 blue chip dividend stocks to buy after the market selloff. You can skip our detailed analysis of a recent selloff and its future implications, and go directly to read 5 Blue Chip Dividend Stocks to Buy After the Market Selloff.
The decline of the US stock market this year has been painful for investors. According to the Bureau of Labor Statistics, in August, the Consumer Price Index rose 0.6% from July and 6.3% from the same period last year, which shows that inflationary pressures are far from over. Economists around the globe are not expecting the inflation pace to slow down anytime soon.
On September 13, Wall Street tumbled to the biggest loss in over two years as major stock exchanges declined sharply after reporting modest gains before. The S&P 500 declined over 4%, while the tech-heavy NASDAQ lost over 5% as the yield-sensitive stocks suffered the most, as reported by Bloomberg. In addition to this, the Dow Jones Industrial Average and the MSCI World Index fell 3.9% and 3.4%, respectively. According to analysts, the Fed’s monetary tightening can push the economy into recession. Given the latest economic data including higher than expected inflation numbers, more investors are expecting an economic slowdown than before.
If the latest economic data continues to miss expectations, the market could decline and many stocks could fall further. Nevertheless, there could be an opportunity for long term investors who buy quality blue chip companies given the low valuations in the market.
Blue chip companies are often leaders in their sectors and have excellent cash flow. Many blue chips also return capital to shareholders through dividends or stock buybacks. In this article, we will discuss some blue chip dividend stocks to buy after the market selloff.
New York Wall Street sign.
Our Methodology:
We took 10 stocks that paid dividends from the S&P 500 that we think have the right mixture of defensive qualities, dividend yield, and growth potential. We then ranked them from #10 to #1 based on the number of hedge funds in our database that held shares in the stock at the end of Q2 2022.
10 Blue Chip Dividend Stocks to Buy After the Market Selloff
10. The Coca-Cola Company (NYSE:KO)
Number of Hedge Fund Holders: 60
Dividend Yield as of September 13: 2.82%
The Coca-Cola Company (NYSE:KO) is an American multinational beverage company that manufactures and sells different beverages and syrups. The company has raised its dividends consistently for the past 60 years and the stock currently offers a quarterly dividend of $0.44 per share. With the dividend raises, The Coca-Cola Company (NYSE:KO) has a yield of 2.82%, as recorded on September 13.
In Q2 2022, The Coca-Cola Company (NYSE:KO) reported revenue of $11.3 billion, which grew by 11.9% from the same period last year. Cash flow from operations stood at nearly $4 billion and its free cash flow came in at $3.6 billion. The company expects to generate over $10.5 billion in free cash flow for FY22, which shows that its dividends are secure.
In September, HSBC raised its price target on The Coca-Cola Company (NYSE:KO) to $76 and maintained a Buy rating on the shares, as the company has new revenue drivers in Latin America and has opened one-exclusive sales and delivery systems.
At the end of Q2 2022, 60 hedge funds tracked by Insider Monkey owned stakes in The Coca-Cola Company (NYSE:KO), down from 64 in the previous quarter. The collective value of these stakes is over $28.3 billion. With over $25.1 billion worth of stakes, Berkshire Hathaway was the company’s leading stakeholder in Q2.
Alongside Mastercard Incorporated (NYSE:MA), Visa Inc. (NYSE:V), and Microsoft Corporation (NASDAQ:MSFT), The Coca-Cola Company (NYSE:KO) is a blue chip dividend stock that many hedge funds owned at the end of Q2 2022.
9. PepsiCo, Inc. (NASDAQ:PEP)
Number of Hedge Fund Holders: 65
Dividend Yield as of September 13: 2.65%
PepsiCo, Inc. (NASDAQ:PEP) is a New York-based multinational food and beverage company that distributes and markets its products globally. In August, Morgan Stanley reiterated its Overweight rating on the stock as the firm sees a clear topline upside for the company. In addition to this, the firm also appreciated the company’s performance this year.
In Q2 2022, PepsiCo, Inc. (NASDAQ:PEP) reported revenue of $20.2 billion, which showed a 5.3% growth from the same period last year. It generated over $2 billion in operating cash flow and its free cash flow for the quarter stood at over $1.07 billion. For FY22, the company expects to return approximately $7.7 billion to shareholders, $6.2 billion of which would be distributed in dividends. In addition to this, it also expects its organic revenue to grow by 10% in FY22.
On July 21, PepsiCo, Inc. (NASDAQ:PEP) declared a quarterly dividend of $1.15 per share, in line with its previous dividend. The company has been raising its dividends consistently for the past 50 years. As of September 13, the stock’s shares yield at 2.65%.
The number of hedge funds tracked by Insider Monkey owning stakes in PepsiCo, Inc. (NASDAQ:PEP) stood at 65 in Q2 2022, growing from 62 in the previous quarter. The collective value of these stakes is over $5.28 billion.
8. Walmart Inc. (NYSE:WMT)
Number of Hedge Fund Holders: 67
Dividend Yield as of September 13: 1.62%
Another blue chip dividend stock is Walmart Inc. (NYSE:WMT), which is an American multinational retail corporation. The company was popular among 67 elite funds in Insider Monkey’s Q2 2022 database, compared with 60 in the previous quarter. The stakes owned by these hedge funds hold a consolidated value of over $3.78 billion. Among these hedge funds, GQG Partners was the company’s leading stakeholder in Q2.
Walmart Inc. (NYSE:WMT) delivered strong results in Q2 2022, posting revenue of $152.6 billion, which showed an 8.2% year-over-year growth. The company’s US comparable sales grew by 6% and its e-commerce growth was 12% in the second quarter. Its cash position also remained strong, as it reported roughly $13 billion in operating cash flow and over $9 billion in free cash flow.
Walmart Inc. (NYSE:WMT) holds a 49-year track record of consistent dividend growth, which is one of the highest records in the retail industry. The company offers $0.56 per share in quarterly dividends, with a dividend yield of 1.62%, as of September 13.
In September, KeyBanc initiated its coverage of Walmart Inc. (NYSE:WMT) with an Overweight rating and a $155 price target, as the company showed margin recovery to normal levels. The firm also highlighted the company’s competitive positioning because of its e-commerce segment.
7. The Procter & Gamble Company (NYSE:PG)
Number of Hedge Fund Holders: 71
Dividend Yield as of September 13: 2.59%
The Procter & Gamble Company (NYSE:PG) is an American multinational consumer goods company. It showed solid results in fiscal Q4 2022. The company’s revenue saw a 3% year-over-year growth to $19.52 billion and its organic sales also grew by 7%. During the year, it generated an operating cash flow of $16.7 billion with its free cash flow productivity standing at 93%. The company remained committed to shareholders, returning over $19 billion of value in FY22, $8.8 billion of which represented dividend payments.
The Procter & Gamble Company (NYSE:PG) has been making consistent dividend payments since its incorporation in 1890. The company has also been raising its dividends for the past consecutive 66 years. It currently pays a quarterly dividend of $0.9133 per share, with shares boasting a yield of 2.59%, as recorded on September 13.
Following the company’s strong quarterly and annual earnings, Barclays maintained an Overweight rating on The Procter & Gamble Company (NYSE:PG) in August and also highlighted the company’s premium-priced portfolio.
Bridgewater Associates was the leading stakeholder of The Procter & Gamble Company (NYSE:PG) in Q2 2022, owing stakes worth over $970 million. In addition to this, 71 hedge funds tracked by Insider Monkey owned stakes in the retail company in Q2, with a total value of over $5.5 billion.
6. Johnson & Johnson (NYSE:JNJ)
Number of Hedge Fund Holders: 83
Dividend Yield as of September 13: 2.73%
Johnson & Johnson (NYSE:JNJ) is a New Jersey-based pharmaceutical industry company that develops medicines and vaccines for various diseases. The company also sells other healthcare and consumer products. In July, SVB Securities maintained its Outperform rating on the company with a $194 price target. The firm appreciated the company’s strong segments and products as it is keeping its costs in check.
In Q2 2022, Johnson & Johnson (NYSE:JNJ) reported revenue of $24 billion, up 3% from the same period last year. The company’s operating cash flow for the quarter came in at $5.58 billion, up from $4 billion in the previous quarter. Its free cash flow also grew to $4.7 billion, from $3.3 billion in the preceding quarter. For Fy22, the company expects its revenue to fall between $93.3 billion to $94.3 billion.
Johnson & Johnson (NYSE:JNJ) holds one of the longest dividend growth track records in the market. The company has been raising its dividends consistently for the past 60 years and has grown it at a CAGR of 6% in the past five years. It currently pays a quarterly dividend of $1.13 per share, with a dividend yield of 2.73%, as recorded on September 13.
At the end of June 2022, 83 hedge funds tracked by Insider Monkey were bullish on Johnson & Johnson (NYSE:JNJ) and owned stakes worth over $6.7 billion. In the previous quarter, 83 hedge funds owned positions in the company as well, with a total value of $7.4 billion.
Mayar Capital mentioned Johnson & Johnson (NYSE:JNJ) in its Q2 2022 investor letter. Here is what the firm has to say:
“J&J is currently our largest position and a long-standing holding. The majority of the group’s sales comes from its collection of pharmaceutical franchises, but a large majority (~45%) comes from its collection of medical device businesses and its consumer brands.
Here’s how JNJ make and spend a dollar of revenues: As of 2021, about 55 cents of that dollar comes from its pharmaceutical sales – sales of drugs to pharmacies and distributors – while 30 cents come from the sale of medical devices, such as surgery equipment and orthopaedics. The rest of that dollar in sales comes from sales of JNJ’s consumer brands such as Listerine mouthwash, Nicorette nicotine tablets and Neutrogena cosmetics.
To make that dollar, however, JNJ typically spends about 25 cents to make the products themselves and another 27 cents on marketing and general administrative functions. This leaves JNJ with about 48 cents on the dollar in profit…”
Like Johnson & Johnson (NYSE:JNJ), Mastercard Incorporated (NYSE:MA), Visa Inc. (NYSE:V), and Microsoft Corporation (NASDAQ:MSFT) are blue chip stocks that also pay dividends that many hedge funds own at the end of Q2 2022.
Click to continue reading and see 5 Blue Chip Dividend Stocks to Buy After the Market Selloff.
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Disclosure. None. 10 Blue Chip Dividend Stocks to Buy After the Market Selloff is originally published on Insider Monkey.
