We recently compiled a list of the 10 Best Blue Chip Dividend Stocks To Buy. In this article, we are going to take a look at where JPMorgan Chase & Co. (NYSE:JPM) stands against the other blue chip dividend stocks.
When it comes to investing in stocks, investors often keep a close eye on the company’s financial health. Why? Because it directly impacts the potential returns on their investments. This is especially crucial for income investors, as solid financial health ensures regular dividend payments and steady dividend growth. In short, a company’s strong financial footing means it’s more likely to keep the cash flowing and the dividends climbing. Blue chip companies, especially those with over $100 billion in market cap, take the lead in this area. These firms are well-established, financially stable, and top players in their industries.
The Dow Jones Industrial Average is commonly regarded as an index of blue chip stocks. This widely watched stock market index includes 30 of the largest and most established publicly traded companies in the US. The index surged by over 4.7% since the start of 2024 and in the past 12 months, it gained 16.4%.
When comparing the performance of the broader market and the Dow Jones, both of which track large-cap U.S. companies, historical data reveals a high correlation between the two indices over time. However, there have been notable instances where their performances diverged significantly. According to a report from S&P Dow Jones Indices, the market substantially outperformed the Dow Jones over one- and three-year periods. Conversely, over the 30-year period leading up to 2019, the Dow Jones slightly outperformed the broader market. This indicates that although these indices often move together, short-term performance can vary, and specific market conditions and economic factors can influence which index performs better during different periods. The Dow Jones underperformed the broader market in 2023 by a wide margin.
While analysts frequently compare the performance of these two indices, it is important to note that the Dow represents only a small segment of the economy. In contrast, the broader market includes nearly 17 times as many companies. According to estimates from S&P Dow Jones Indices, more than $11.2 trillion investments were benchmarked to the broader market at the end of 2019. This is a staggering 350 times greater than the $32 billion benchmarked to the Dow. A key reason for the broader market’s outperformance compared to the Dow last year is that the market places more emphasis on the tech giants, which were the primary drivers of the wider market’s gains throughout the year.
Returning to the importance of blue chip companies, investors favor these firms because their strong financial health allows them to grow their dividends consistently. Dividend growth has remained a strong preference of investors over the years, prompting companies to increase their dividend payouts steadily. In this article, we will take a look at some of the best blue-chip dividend stocks.
Our Methodology:
For this list, we began by examining the current members of the Dow 30 that boasted a minimum market capitalization of $100 billion as of July 7. From this initial group, we specifically focused on companies that consistently pay dividends to their shareholders and have yields of at least 2%, as of July 7. These stocks were then ranked in ascending order of the number of hedge funds having stakes in them at the end of Q1 2024, as per Insider Monkey’s database. Why are we interested in 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 group of business people discussing plans around a boardroom table adorned with a financial services company logo.
JPMorgan Chase & Co. (NYSE:JPM)
Number of Hedge Fund Holders: 112
JPMorgan Chase & Co. (NYSE:JPM) is an American investment banking company that specializes in a wide range of related services and products. The stock has outperformed the broader market over the past two years, delivering an 80% return to shareholders, while the market returned over 42% during this period. The company is currently experiencing strong business momentum, driving its performance forward. In the first quarter of 2024, it reported revenue of $42 billion, up from $38.3 billion from the same period last year. The company posted a 2% expansion in its deposit base and a 16% increase in loans during the quarter, which analysts see as positive trends. In addition, while the bank increased its provision for credit losses by $1.9 billion, this figure was lower than the $2.3 billion recorded in the same period last year.
JPMorgan Chase & Co. (NYSE:JPM) could see continued positive outcomes once the Federal Reserve begins to decrease interest rates. In comparison to smaller banks, the company benefits from a cost advantage in attracting low-cost deposits and efficiently leveraging its substantial expenses across a larger revenue base. This trend contributes to strong and consistent profitability.
Carillon Tower Advisers highlighted JPMorgan Chase & Co. (NYSE:JPM)’s strong performance in its Q1 2024 investor letter. Here is what the firm has to say:
“JPMorgan Chase & Co. (NYSE:JPM) contributed positively to performance following solid financial results and positive guidance for the remainder of 2024. Moreover, growing chatter around rising capital markets activity likely contributed to the stock’s strong performance relative to other banks. Recall that JPMorgan has a robust capital markets franchise.”
JPMorgan Chase & Co. (NYSE:JPM) pays a quarterly dividend of $1.15 per share and plans to increase it by nearly 9% after completing its stress test process. With a dividend yield of 2.25% as of July 7, JPM is one of the best dividend stocks on our list. In the most recent quarter, it returned $3.3 billion to shareholders through dividends.
JPMorgan Chase & Co. (NYSE:JPM) was a popular buy among elite funds in the first quarter of 2024, as 112 funds held stakes in the company, growing from 103 in the previous quarter, according to Insider Monkey’s database. These stakes have a consolidated value of over $8.4 billion.
Overall JPM ranks 1st on our list of the best blue chip dividend stocks to buy. You can visit 10 Best Blue Chip Dividend Stocks To Buy to see the other blue chip dividend stocks that are on hedge funds’ radar. While we acknowledge the potential of JPM as an investment, our conviction lies in the belief that some deeply undervalued dividend stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued dividend stock that is more promising than JPM but that trades at less than 7 times its earnings and yields nearly 10%, check out our report about the dirt cheap dividend stock.
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Disclosure: None. This article is originally published at Insider Monkey.
