Blue-chip stocks appeal to investors with their stability and consistent returns. However, many also pay big dividends and can be a great source of income for retirees or those working to build a nest egg.
It has been simple, solid investment advice for decades: buy and hold blue-chip stocks for the long term. And in today’s volatile market, it’s more important than ever to have a solid, growing set of blue-chip investments to power your portfolio.
Blue-chip stocks that also offer strong dividend yields should attract investors of all experience, background and size.
In this article, we look at seven blue-chip stocks with strong dividend yields that could offer big returns.
- Nike (NYSE:NKE)
- Mastercard (NYSE:MA)
- NextEra Energy (NYSE:NEE)
- General Mills (NYSE:GIS)
- AT&T (NYSE:T)
- Chevron (NYSE:CVX)
- AbbVie (NYSE:ABBV)
Blue-Chip Stocks: Nike (NKE)
Retailers are expected to perform well as the economy starts running at full capacity again, and Nike is a consistent winner among reliable blue-chip stocks.
With its widespread brand recognition and stable of athlete endorsement deals, Nike is one of the biggest apparel companies in the world. More than half of the Beaverton, Oregon-based company’s revenues now come from markets outside the U.S., nearly $40 billion of foreign sales in the past year.
The global pandemic proved to be the opportunity Nike needed to ramp up its online business. In its first quarter of fiscal 2021, the company reported that its digital sales rose 82%. No wonder so many analysts pick NKE stock as a surefire winner in the retail and apparel space.
An annual dividend of $1.10 a share for a yield of 0.81% makes Nike shares an attractive option for investors who appreciate consistent returns. Nike’s share price is up 8% since the end of January at $141.19, and has risen 127% in the past 12 months.
Credit cards are a safe bet as people emerge from lock down, travel again and ramp up their personal spending. And among credit cards, Mastercard is king of the hill.
While the company’s dividend yield is lower than many other stocks on this list at 0.5%, MA stock holders have benefited as the payments processor has consistently raised its dividend in the 15 years since the payment company went public on the New York Stock Exchange. And that dividend growth is likely to continue with greater adoption of electronic spending and digital payments.
While it was slowed a by the global pandemic, Mastercard has still managed to increase its annual revenue an average of 15% in each of the past four years, and its earnings per share (EPS) have appreciated nearly 25% during the same period of time.
Now that the global economy is reopening, Mastercard is sure to see an uptick in its business as people use its credit cards more. Many analysts have MA stock at the top of their list of reopening trades. The company’s share price has jumped 22% since the end of January to $384.38 a share, and is up 90% since March 2020.
NextEra Energy (NEE)
Oil and gas are on the rebound and energy stocks are back on investors’ watch lists. And NextEra Energy is one of the more exciting energy plays available today. Owning the company’s stock gives investors access to NextEra’s legacy energy portfolio of oil and natural gas, as well as exposure to newer, renewable forms of energy such as wind and solar power. This combination of old and new forms of energy means that NextEra Energy literally covers all the bases when it comes to the energy and utility sectors.
And NEE stock has been performing gangbusters recently. Not only did the company execute a four-for-one stock split last October, its net income has grown 70% over the past decade, while its annual dividend is up 180% since 2011. In that 10-year period, NextEra Energy delivered total returns to investors of nearly 650%. Not too shabby.
Today, NextEra Energy is one of the largest producers of renewable energy in the world. After the split on Oct. 26 last year, NEE stock rose to a 52-week high of $87.69 a share. While it has since slipped to $74.86 a share, investors should definitely buy the dip. A dividend yield of 1.8% is another reason why NextEra Energy is an attractive option for people wanting exposure to the energy sector.
General Mills (GIS)
Investors concerned with securing the biggest possible dividend payments from the stocks they own should consider buying General Mills, the Minneapolis-based food company that makes iconic products such as Cheerios cereal, Haagen-Dazs ice cream, Betty Crocker baking products, Old El Paso tacos and salsa, and Nature Valley granola bars. General Mills generates more than $15 billion of revenue annually and targets 10% sales growth per year.
General Mills has also been taking steps over the past year to diversify its operations, buying the Blue Buffalo pet food company, which saw its business grow 50% in 2020 during the pandemic and is expected to see its sales exceed $1 billion this year. Blue Buffalo is the number one pet food brand in terms of online sales.
Perhaps most interesting to dividend-focused investors is the fact that General Mills has paid a dividend to its shareholders year-in and year-out for more than 100 years, and has increased its dividend payout 8% annually in the past five years. Currently, General Mills pays an annual dividend of $2.04 a share, for a yield of 3.55%.
GIS stock is up 7% since January at $58.13 a share, and up 23% in the past year.
AT&T may seem like an old legacy telecommunications company to many people. But make no mistake, AT&T is still a relevant player among telecom and technology companies.
After all, the Dallas-based company’s television, mobile and broadband internet services today reach more than 150 million customers. In the age of content and streaming, AT&T also owns popular brands such as HBO and Warner Brothers products such as Turner Classic Movies, DC Comics and the Cartoon Network. AT&T holds the world’s largest television and film catalogue.
If that weren’t enough, AT&T is now getting a boost from the roll-out and uptake of 5G wireless internet service. AT&T is bundling its 5G wireless service with other products such as its television service.
In addition to the growth story, investors should also like the fact that AT&T is considered a dividend aristocrat, with a massive yield of 7.02% and an annual payout of $2.08 a share. Plus, AT&T has increased its dividend for 35 consecutive years. T stock currently trades right around $30 a share, up 15% from March 2020.
Chevron’s stock has been on an upswing as oil prices have rebounded and after it was disclosed that famed investor Warren Buffett has taken a sizable stake in the integrated energy company.
With operations that cover all parts of the oil and natural gas industry, including exploration, production and refining, CVX stock is one of the best ways for investors to capitalize on the revitalized global energy sector.
CVX stock has been an outperformer year-to-date, rising 32% since the first trading day of 2021. Today, Chevron stock trades at $111.19 a share and shows no signs of slowing down. Since it bottomed in March 2020, Chevron stock has risen 102%. No wonder, Warren Buffett bought a stake in the company. Buffett no doubt also likes Chevron’s healthy 4.71% dividend yield and annual payout of $5.16 per share. Chevron has increased its annual dividend for more than 30 years.
Chicago-based bio-pharmaceutical company AbbVie has only been in existence since 2013, when it was spun-off from Abbott Laboratories.
But in less than a decade, the company has established itself as a consistent company in the pharmaceutical space. Its popular arthritis drug “Humira” has proven to be a blockbuster drug for the company, accounting for more than half of its annual revenues. Humira’s patent protection extends until 2023.
AbbVie is also developing several new medications, notably to treat cancer. Two of the company’s cancer drugs, Imbruvica and Venclexta, are generating nearly $5 billion in annual revenues and growing at a brisk pace. AbbVie forecasts that, by 2025, Imbruvica and Venclexta could contribute nearly $10 billion to its annual sales.
Additionally, AbbVie pays a competitive dividend of $4.87%, equivalent to $5.20 per share. The company increased its annual dividend payment by 11.5% in 2019. ABBV stock is up 5% since February 1 at $107.87 per share, and has grown 67% since March 2020.
On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Joel Baglole has been a business journalist for 20 years. He spent five years as a staff reporter at The Wall Street Journal, and has also written for The Washington Post and Toronto Star newspapers, as well as financial websites such as The Motley Fool and Investopedia.