In this article, we discuss blue-chip dividend stocks with over 5% yield. You can skip our detailed analysis of dividend stocks and their returns over the years, and go directly to read 5 Blue Chip Dividend Stocks with Over 5% Yield.
In May 2022, US inflation reached its 40-year high, with the consumer price index surging 8.6% from the previous year. Moreover, the stock market also saw its worst first half of the year since 1970, and US stocks lost nearly $9 trillion in market value since the end of 2021. The worsening situation has drifted investors’ attention away from the growth players to dividend stocks, as they offer stable income during market volatility. Historically, dividend stocks performed well during market downturns since the 1940s. This was also supported by Goldman Sachs’ report, which stated that dividends paid by the S&P 500 companies declined by only 1% during the recessionary periods after WWII.
According to Goldman Sachs’ equity strategist Ben Snider, dividend stocks in the S&P 500 tend to outperform their counterparts during market turbulence and reach their peak five-six months before the start of a recession. He further mentioned that even in the sharpest recession of 2020, S&P 500 dividends fell by only 3%. Famous dividend stocks like Johnson & Johnson (NYSE:JNJ), The Coca-Cola Company (NYSE:KO), and Merck & Co., Inc. (NYSE:MRK) are gaining ground among investors as they generated positive returns year-to-date and offer a solid history of dividend growth. Moreover, investors also focus on healthy yields while considering the strong business fundamentals of the company. In view of this, we discuss the best blue-chip dividend stocks with over 5% yield.
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Our Methodology:
For this list, we picked strong blue-chip dividend stocks with over 5%. We also considered the respective companies’ business fundamentals and dividend policies. These stocks are also famous among 900+ elite funds in Insider Monkey’s Q1 2022 database.
Blue Chip Dividend Stocks with Over 5% Yield
10. Walgreens Boots Alliance, Inc. (NASDAQ:WBA)
Dividend Yield as of July 16: 5.02%
Walgreens Boots Alliance, Inc. (NASDAQ:WBA) is a pharmaceutical company that also operates retail stores. The company also specializes in beauty products.
At the end of Q1 2022, Walgreens Boots Alliance, Inc. (NASDAQ:WBA) reported $2.3 billion in cash and cash equivalents, up from $559 million reported during the same period last year. The company also generated $1.3 billion in free cash flow and paid $1.25 billion in dividends during the quarter. On July 13, Walgreens Boots Alliance, Inc. (NASDAQ:WBA) announced a 0.5% hike in its quarterly dividend to $0.48 per share. This was the company’s 47th consecutive year of dividend growth. As of July 16, the stock’s dividend yield came in at 5.02%.
In July, RBC Capital appreciated the strong earnings of Walgreens Boots Alliance, Inc. (NASDAQ:WBA) and recovery in its international business but showed concerns about supply chain issues. In light of this, the firm lowered its price target on the stock to $42, with a Sector Perform rating on the shares.
According to Insider Monkey’s data, 38 hedge funds held stakes in Walgreens Boots Alliance, Inc. (NASDAQ:WBA) in Q1, down from 42 in the previous quarter. The collective value of these stakes is over $736.8 million. Citadel Investment Group was the company’s leading shareholder in Q1.
In addition to Johnson & Johnson (NYSE:JNJ), The Coca-Cola Company (NYSE:KO), and Merck & Co., Inc. (NYSE:MRK), WBA is also one of the prominent dividend stocks to consider.
Miller Howard Investments mentioned Walgreens Boots Alliance, Inc. (NASDAQ:WBA) in its Q3 2021 investor letter. Here is what the firm had to say:
“While optimistic about a recovery, we continue to balance our cyclical holdings with dividend-payers in stable, less economically-sensitive industries. We took a position in Walgreens (WBA) based on its low valuation, high dividend yield, and stable business model.”
9. Prudential Financial, Inc. (NYSE:PRU)
Dividend Yield as of July 16: 5.20%
Prudential Financial, Inc. (NYSE:PRU) is a New Jersey-based insurance company that provides services related to retirement planning, investment management, and insurance. In Q1 2022, the company reported $1.62 trillion in assets under management.
Prudential Financial, Inc. (NYSE:PRU) currently offers a quarterly dividend of $1.20 per share, raising it by 4% in March. The company has been raising its dividend consecutively for the past 14 years. Its current payout ratio is safe at 31.6% and is set to reach in the range of low-40% in FY22. In Q1, Prudential Financial, Inc. (NYSE:PRU) paid $462 million in dividends to shareholders. As of July 16, the stock’s dividend yield came in at 5.20%.
In July, JPMorgan raised its price target on Prudential Financial, Inc. (NYSE:PRU) to $122 but kept a Neutral rating on the shares, highlighting risks confronted by the insurance sector.
As per Insider Monkey’s Q1 2022 database, 26 hedge funds held investments in Prudential Financial, Inc. (NYSE:PRU), worth nearly $173 million. In comparison, 31 hedge funds owned stakes in the company in the previous quarter, valued at $347.4 million.
8. AT&T Inc. (NYSE:T)
Dividend Yield as of July 16: 5.40%
AT&T Inc. (NYSE:T) has performed really well during the previous recessions, increasing its dividends during the financial crisis of 2008 and 2009. The company has raised its payouts consecutively for the past 23 years. It currently offers a quarterly payout of $0.2775 per share, with a yield of 5.40%, as of July 16. The company’s free cash flow after dividends stood at over $3 billion in Q1 2022, up from $463 million during the same period last year.
In June, Scotiabank assumed its coverage on AT&T Inc. (NYSE:T) with a Sector Perform rating and a $22.50 price target. The firm appreciated the company’s growing wireless business.
At the end of Q1 2022, 74 hedge funds in Insider Monkey’s database owned stakes in AT&T Inc. (NYSE:T), up from 70 in the previous quarter. The combined value of these stakes is over $4 billion. Arrowstreet Capital held the largest stake in the company in Q1, worth $678.5 million.
Weitz Investment Management mentioned AT&T Inc. (NYSE:T) in its Q4 2021 investor letter. Here is what the firm has to say:
“After several quarters of pandemic-induced outsized growth, new broadband connection growth has slowed for U.S. cable operators. This slower growth has coincided with a renewed push by competitors like Verizon and AT&T to offer high-speed data (either via wireless connects or by building new fiber-optic networks).”
7. Philip Morris International Inc. (NYSE:PM)
Dividend Yield as of July 16: 5.54%
Philip Morris International Inc. (NYSE:PM) is a New York-based manufacturing company that deals in the production of tobacco and related products. The company’s products are sold in over 180 countries.
Philip Morris International Inc. (NYSE:PM) ended Q1 2022 with $4.6 billion available in cash and cash equivalents, up from $4.2 billion in the previous quarter. The company’s operating cash flow stood at over $10 billion and it also repurchased shares of common stock for $199 million. Philip Morris International Inc. (NYSE:PM) currently pays a quarterly dividend of $1.25 per share, with a yield of 5.54%, as of July 16. The company has been growing its payouts for the past 14 years consistently. Its payout ratio sits at 85.6%, improving from 95.3% in 2021.
The number of hedge funds tracked by Insider Monkey owning positions in Philip Morris International Inc. (NYSE:PM) stood at 55 in Q1, increasing from 47 in the previous quarter. These hedge funds hold collective stakes worth $6.6 billion in the company.
6. Mercury General Corporation (NYSE:MCY)
Dividend Yield as of July 16: 5.96%
Mercury General Corporation (NYSE:MCY) is an American insurance company that offers many types of property and casualty insurance coverages to its consumers.
Mercury General Corporation (NYSE:MCY) pays a quarterly dividend of $0.635 per share, growing it by 0.4% in November 2021. The company’s dividend growth has been really slow at 0.4% annually from 2012 to 2021 but it maintains a 33-year track record of consistent dividend increases. Moreover, its payout ratio stands at 56.5%, which is considered safe for the insurance sector.
At the end of March 2022, 20 hedge funds in Insider Monkey’s database held investments in Mercury General Corporation (NYSE:MCY), up from 16 in the previous quarter. The total value of these investments stood at $128.8 million. With over 1.3 million shares, Renaissance Technologies was the largest stakeholder of the California-based company in Q1.
Just like famous dividend stocks, such as Johnson & Johnson (NYSE:JNJ), The Coca-Cola Company (NYSE:KO), and Merck & Co., Inc. (NYSE:MRK), MCY is also popular among investors.
Click to continue reading and see 5 Blue Chip Dividend Stocks with Over 5% Yield.
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Disclosure. None. 10 Blue Chip Dividend Stocks with Over 5% Yield is originally published on Insider Monkey.
