The U.S. Federal Reserve announced last week that it would be hiking interest rates more aggressively in its efforts to curb rampant inflation. That’s leading investors away from high-yielding and risky stocks to safer options.
Perhaps the best strategy at this time is to invest in blue-chip stocks with dividends, which offer consistent returns and healthy dividend payouts.
Adding blue-chip stocks to your portfolio can significantly reduce your market risk and create consistent shareholder value. Blue-chips protect shareholders from capital erosion in the event of a downturn.
Moreover, consistent dividend payouts and share repurchases often compensate for their inability to offer outsized returns.
Having said that, let’s look at seven of the best blue-chip stocks with dividends to supercharge your portfolio:
- Pfizer (NYSE:PFE)
- JPMorgan Chase (NYSE:JPM)
- Chevron Corporation (NYSE:CVX)
- Lockheed Martin (NYSE:LMT)
- Intel Corporation (NASDAQ:INTC)
- AbbVie (NYSE:ABBV)
- PepsiCo (NASDAQ:PEP)
Blue-Chip Stocks to Buy: Pfizer (PFE)
- Annual Dividend: $1.60
- Current Yield: 3.04%
- Last Close: $52.74
- 52-Week Range: $35.76 – $61.71
Pharmaceutical giant Pfizer has played a key role in marginalizing Covid-19 with its hugely successful vaccine. It raked in billions in revenue from vaccine sales in the last 18 months but still boasts an incredible growth runway ahead.
Layer that up with Pfizer’s incredible pipeline, robust products and a Covid-19 antiviral pill in Paxlovid and investors are looking at a spectacular time ahead. Furthermore, it boasts one of the strongest dividend profiles in its sector, with more than 3% yield and 12 years of dividend growth.
JPMorgan Chase (JPM)
- Annual Dividend: $4.00
- Current Yield: 2.84%
- Last Close: $141.18
- 52-Week Range: $127.27 – $172.96
JP Morgan is the pick of the banking stocks at this time with a fortress balance sheet and the ability to perform consistently across all key segments. It is the largest American bank as measured by assets held, generating over $120 billion in revenues last year.
Its recently released fourth-quarter results disappointed investors due to its dwindling profitability. It is looking to increase its share in retail deposits and middle-market leading.
Moreover, it will be exploring new opportunities in the digital space, which will further expand its total addressable market. Therefore, capital expenditures and other costs will weigh down the bank’s profitability in the near term.
However, its long-term case remains intact, including a growing dividend with an amazing near 3% yield.
Blue-Chip Stocks to Buy: Chevron Corporation (CVX)
- Annual Dividend: $5.68
- Current Yield: 3.35%
- Last Close: $164.32
- 52-Week Range: $92.86 – $174.76
Energy giant Chevron Corporation boasts one of the strongest fundamentals in the oil business. Its business has been booming in the past year, with double and triple-digit expansion in its revenues and earnings. Additionally, its free cash flow balance grew at a staggering 141% last year.
On top of that, CVX stock continues to increase dividends, yielding over 3% with a 65% payout ratio. Therefore, it is one of the dividend champions in its industry.
Moreover, with multiple tailwinds, expect another strong margin and revenue expansion year. Despite its stellar performance and outlook, CVX stock trades at just 1.67 times sales.
Lockheed Martin (LMT)
- Annual Dividend: $11.20
- Current Yield: 2.52%
- Last Close: $437.15
- 52-Week Range: $324.23 – $479.99
Lockheed Martin is the leading global defense contractor. It designs, develops, and distributes technology systems for commercial and defense purposes. Efficient capital allocation and exploring dynamic research and development opportunities have been its hallmark.
Despite its hefty investments, it maintains one of the more solid balance sheets in its business. Last year it generated a whopping $9.2 billion in cash flows. However, that figure pales compared to its management’s future estimates of $26.1 billion in cash flows from 2021 through 2023.
Also, Lockheed is one the most shareholder-friendly companies in its sector, returning 91% of its free cash flows to stockholders last year.
Blue-Chip Stocks to Buy: Intel Corporation (INTC)
- Annual Dividend: $1.46
- Current Yield: 2.79%
- Last Close: $52.25
- 52-Week Range: $43.63 – $68.49
Despite industry headwinds, chip giant Intel is coming off its best year yet. Its revenue of $79 billion for the year comfortably exceeded expectations and was a record.
Fortune Business Insights forecasts the semiconductor market to grow 8.6% annually from 2021 to 2028. Therefore, Intel has an exciting outlook ahead and will continue to grow at a brisk pace for the foreseeable future.
Client computing has been the core segment for Intel, but the company plans to expand its non-client computing segments. These include high-growth areas such as the internet of things, which can help boost the business’s top and bottom lines for years to come.
Moreover, with a 2.79% yield and 19 years of dividend growth, INTC stock is perhaps a no-brainer investment.
- Annual Dividend: $5.64
- Current Yield: 3.52%
- Last Close: $162.18
- 52-Week Range: $104.17 – $163.28
However, with a growing cash balance and a robust drugs pipeline, the business is looking to diversify its revenue stream. Humira accounted for roughly 35% of sales last year, showing how effectively AbbVie has deployed its resources to manage the patent expiry risk.
The company will lose its exclusivity on Humira in 2023 but still has plenty of catalysts to drive revenues for the foreseeable future. Moreover, ABBV stock remains an excellent dividend stock, with an attractive 3.52% yield and eight years of dividend growth.
It boasts fantastic cash flows and a robust balance sheet making their dividend payments safe.
Blue-Chip Stocks to Buy: PepsiCo (PEP)
- Annual Dividend: $4.30
- Current Yield: 2.59%
- Last Close: $168.19
- 52-Week Range: $140.11 – $177.24
PepsiCo is one of the world’s largest non-alcoholic beverage companies. Its unbelievable brand equity has made it one of the largest companies in the world across several metrics.
PEP stock is a far less volatile investment than the broader market, generating sustained returns for its investors for years. Moreover, it’s a dividend aristocrat, having grown its payouts for the past 49 years.
It’s also one of those sleep-well-at-night types of investment, with valuable brands which will continue to resonate with customers. Its pricing power will enable it to navigate the current inflationary environment with relative ease effectively.
On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.