We recently published a list of 12 Best Fortune 500 Dividend Stocks To Buy Right Now. In this article, we are going to take a look at where PBP p.l.c. (NYSE:BP) stands against other best Fortune 500 dividend stocks to buy right now.
Compiled and published by Fortune Magazine, the Fortune 500 is an annual list that ranks the biggest US companies by revenue. In total, the Fortune 500 companies represent two-thirds of the US GDP with $18.8 trillion in revenues, $1.7 trillion in profits, and $43 trillion in market value (as of March 28, 2024), and they employ a workforce of 31 million around the globe.
READ ALSO: 15 Best NASDAQ Dividend Stocks to Buy
2024 proved to be a big year for large-cap stocks, as the broader US market achieved gains of nearly 25%, piggybacking on a 26% performance the year before. Large-cap stock funds, with the heaviest tilt toward growth stocks, performed the best last year, even as the market’s rally somewhat broadened from the handful of mega tech companies that have led much of the bull market.
However, the tailwinds that propelled the market to new heights are beginning to recede, as the rate of monetary policy easing slows down, long-term interests swing upward, inflation becomes sticky, and the US economy is slowing down. Moreover, the upcoming presidency of Donald Trump and his much-rumored tariffs could also herald a more volatile period for markets, as they could further fan inflation fears and put pressure on stock prices.
That said, the expected upcoming fluctuation isn’t going to be something that the mega corporations haven’t dealt with before. A 2023 report by J. P. Morgan revealed that despite the considerable volatility during the period, large-cap stocks gained around 162% between 2013 and 2023, galvanized primarily by big tech. Another 2023 report by CNBC unveiled that large US companies outperformed other investments between 2003 and 2023, with average returns of 9.3%. However, it hasn’t always been a smooth ride, as despite the stability and reliability large-cap stocks are known for, investors had to survive drops of 56.8% during the 2007-2009 bear market, 33.9% in 2020, and 25.4% in 2022.
In addition to the few tech giants regularly making headlines with their gains, large-cap dividend stocks could also be an attractive option for investors looking for a reliable, significant, and growing stream of income. According to Howard Silverblatt, Senior Index Analyst at S&P Dow Jones Indices, the broader US large caps are expected to post an 8% increase in dividend payments in 2025, compared to the 6.4% uptick in 2024, 5.1% gains in 2023, and the 10.8% increase witnessed in 2022.
Large-cap companies tend to have more robust balance sheets compared to their smaller counterparts, enabling them to navigate through market fluctuations more smoothly while also returning value to their shareholders. Corporations in the US have continuously grown their considerable cash stockpiles since the beginning of the pandemic, thanks to the economic resilience we have witnessed recently. A report from treasury advisory firm Carfang Group revealed that as of Q1 2024, US corporations increased their cash holdings to an all-time high of $4.11 trillion, up 12.6% from the same period in 2024 and $1.28 trillion more from their pre-pandemic levels.
Methodology
To collect data for this article, we referred to the top 50 companies among the Fortune Global Rankings. Then, we picked out 12 US-listed companies with the highest dividend yields as of January 13, 2025, and ranked them by their number of hedge fund investors according to the Insider Monkey database as of Q3 2024.
At Insider Monkey we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A large turbine generating power from natural gas, smoke rising in the background.
BP p.l.c. (NYSE:BP)
Number of Hedge Fund Holders: 38
Dividend Yield: 5.86%
Market Cap: $68.1 billion
PBP p.l.c. (NYSE:B) is a British multinational company operating in all areas of the oil and gas industry, including exploration and extraction, refining, distribution and marketing, power generation, and trading.
Another new area of focus for BP p.l.c. (NYSE:BP) is hydrogen. In order to produce clean fuels and reduce greenhouse emissions, the company intends to grow its hydrogen business by investing in five to ten projects worldwide. It aims to produce 500,000 to 700,000 tons of low-carbon hydrogen annually by 2030. It was recently announced that BP has made the final investment decision for its 100 MW Linden Green Hydrogen project, expected to produce up to 11,000 tons of green hydrogen annually.
BP p.l.c. (NYSE:BP)’s charging business is also a step towards energy transition and the segment seems to be doing well. By the end of Q3 2024, the company’s EV business had witnessed a staggering growth of 80% YoY and cumulatively by the end of Q3 2024, BP had already achieved the milestone of 1 terawatt hour of electrons sold to its customers around the globe.
BP p.l.c. (NYSE:BP) is targeting to grow its oil and gas output through the end of the decade while also continuing to make high-grade investments in low-carbon and renewables. The company announced earlier this month that it has successfully started gas production from the GTA Phase 1 project, one of Africa’s deepest and most complex gas developments. The energy firm has also pledged to increase oil production by 44% and gas output by 89% from India’s largest field, with full-scale visibility anticipated by 2027-28.
However, the slump in crude prices and lower refining margins weighing down the oil and gas sector have also taken a toll on BP p.l.c. (NYSE:BP). The company reported its weakest quarterly earnings in nearly four years in Q3 of 2024, with $2.3 billion in underlying profit, down 30% YoY. Despite the tough situation, BP remains focused on returning value to its shareholders and announced another $1.75 billion share buyback and a dividend per ordinary share of $0.08 at the end of the third quarter of 2024.
Overall, BP ranks 11th on our list of best Fortune 500 dividend stocks to buy right now. While we acknowledge the potential for BP as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than BP but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap
Disclosure: None. This article is originally published at Insider Monkey.
