Blue-chip dividend stocks have always been relevant. While they’re not the most exciting investments, they provide a steady hand during market uncertainty. This attribute has just become even more critical.
With an already tense situation in the geopolitical realm boiling over, investors will likely seek reassurances. It doesn’t get much better than established stalwarts that pay consistent and/or reliable passive income. On this note, below are top blue-chip dividend stocks to consider.
RTX (RTX)
An aerospace and defense contractor, RTX (NYSE:RTX) – formerly known as Raytheon – offers several solutions in the military hardware space. It’s a controversial idea in that sense because RTX may rise higher due to tensions in the Middle East. Nevertheless, an attack on a sovereign nation can’t be ignored, which invariably enhances the relevance of RTX stock.
To be fair, analysts are not exactly bullish on the idea, rating shares a hold with a $96.46 price target. Still, given the recent paradigm shift, this dynamic will likely change. On top of that, the company offers a forward yield of 2.36%. That matches the industrial sector’s average yield. Notably, the payout ratio sits at 38.34%, implying strong confidence in terms of yield sustainability.
For the current fiscal year, analysts are looking for earnings per share of $5.39. That’s a decent improvement over last year’s print of $5.06. As for the top line, they’re targeting $78.73 billion, up 5.9% year-over-year. Again, with circumstances changing for the worse in the geopolitical space, RTX ranks among the blue-chip dividend stocks to consider.
Lockheed Martin (LMT)
Another top-tier defense contractor, Lockheed Martin (NYSE:LMT) also isn’t quite getting the love from analysts. Presently, LMT comes in as a hold consensus with an average price target of $478.07. The high-side target lands at $540. Still, with the dramatic shift in the landscape in the Middle East, Lockheed will probably garner more positive attention.
In terms of passive income, the defense and aerospace specialist offers a forward yield of 2.8%. What investors will really appreciate is the track record. Over the past 21 years, it has consistently raised its payout. Further, the payout ratio is reasonable at 45.67%, thus providing confidence regarding yield sustainability.
While Lockheed isn’t exactly lighting up the board financially, it’s a consistent performer. In fiscal 2023, the company’s positive earnings surprise came out to 5.33%. For the current fiscal year, covering experts are seeking EPS of $26.04, which is lower than last year’s $27.85.
On the top line, though, they’re targeting $69.49 billion, up 2.8% above last year’s $67.57 billion. Again, given the paradigm shift, these estimates could easily rise, making LMT one of the blue-chip dividend stocks to watch.
NextEra Energy (NEE)
Let’s pivot away from the controversial defense industry and focus on another relevant space: utilities or specifically regulated electric. With NextEra Energy (NYSE:NEE), investors receive a broad canvas. First, they stand to benefit from the core business of generating and distributing electric power to retail and wholesale customers. Second, NextEra consistently champions renewable energy infrastructure.
With any tension in the Middle East comes concerns about the stability of global oil supply chains. So, if the Russian invasion of Ukraine hasn’t taught us anything yet, then certainly Iran’s strike against Israel will. If we continue to depend on fossil fuels, we are vulnerable to volatile, unpredictable geopolitical flashpoints.
Right now, NextEra offers a forward yield of 3.27%, which is a bit lower than the sector average yield of 3.75%. However, the company commands 30 years of consecutive payout increases.
To be upfront, the risk factor is that for fiscal 2024, analysts anticipate a 1.3% decline in revenue. However, with the shifting sands, I suspect that analysts will boost their assessments. Thus, NEE is one of the blue-chip dividend stocks to buy.
Exxon Mobil (XOM)
Frankly, I though that Exxon Mobil (NYSE:XOM) and its ilk sold themselves prior to the Middle East flashpoint. One upside catalyst that has nothing to do with warfare is the impressive U.S. jobs market. With the economy continuing to generate more nonfarm payrolls, the conclusion is rather straightforward: more dollars are chasing after fewer goods. That’s inflationary and that’s cynically good for oil.
However, with tensions boiling over in many parts of the world, XOM sells itself as one of the best blue-chip dividend stocks to buy. Analysts rate shares a moderate buy with a $125.31. I’m almost certain this print will rise much higher in the coming months. As for the passive income, Exxon carries a forward yield of 3.16%. While that’s lower than the energy sector’s 4.24% average yield, the oil giant also has increased its payout across 41 years.
In full disclosure, covering experts right now anticipate declines in fiscal 2024’s earnings and growth projections. However, with the geopolitical shift, the most optimistic forecast of $11.08 EPS on sales of $384.24 billion is probably reasonable.
Kroger (KR)
As a stalwart in the grocery supermarket business, Kroger (NYSE:KR) makes a great case for blue-chip dividend stocks. No, it’s not the most exciting place to be as an investor, let’s not kid ourselves. However, it’s likely that should tensions erupt into a protracted conflict in the Middle East, oil supplies will get disrupted. If that happens, it’s not just companies like Exxon Mobil that will benefit from higher profitability potential.
Rather, I’m looking at Kroger as a downwind beneficiary. Why? Because if oil prices skyrocket, that means practically everything else will rise in price. After all, your morning cereal probably didn’t arrive at your local Kroger store on a solar-powered truck. And because KR stock represents an indelible investment, people have no choice but to pay up.
Let’s look at the numbers. For the current fiscal year, analysts project EPS to reach $4.42 on sales of $148.73 billion. Both stats are down against last year’s results. However, the high-side estimate of $4.49 EPS on revenue of $152.74 billion is likely in the cards.
McDonald’s (MCD)
Even though the state of humanity is rather depressing at the moment, this framework may surprisingly help fast-food giant McDonald’s (NYSE:MCD). We can talk all day about being financially prudent. However, we all need a culinary pick-me-up. The Golden Arches provide just that. Also, it’s a great source for coffee and breakfast on the go, particularly for workers who have to return to the office.
As a powerhouse on Wall Street, McDonald’s is also a great place for passive income. Currently, the company provides a forward yield of 2.5%. That’s a decent bit above the consumer discretionary industry’s average yield of 1.89%. Better yet, the company enjoys a history of 48 years of consecutive annual dividend increases. If you’re looking for reliable blue-chip dividend stocks, this is it.
For fiscal year 2024, covering experts are looking for EPS of $12.43. That’s a decent bump up from last year’s print of $11.94. Also, they’re anticipating a top-line print of $26.88 billion or 5.4% above 2023’s result of $25.49 billion. For fiscal 2025, sales are projected to hit $28.5 billion, with the high-side estimate landing at $29.33 billion.
AbbVie (ABBV)
A pharmaceutical behemoth, AbbVie (NYSE:ABBV) presents a compelling case for blue-chip dividend stocks to buy. As I’ve mentioned many times before, AbbVie bought out Allergan. With the acquisition, the pharma now controls the Botox anti-wrinkle treatment. Because social media focuses so much on the superficial and because none of us are getting any younger, ABBV stock could be a huge hit.
Yeah, it’s a cynical talking point but that’s the world we live in I’m afraid. As for the passive income, the company is the most generous one on this list. It offers a forward yield of 3.82%, well above the healthcare industry’s average yield of 1.58%. Even better, the company features 52 years of consecutive dividend increases.
If that wasn’t enough, analysts rate shares a consensus moderate buy with a $181.47 average price target. For the current fiscal year, the experts project EPS of $11.20 on sales of $54.64 billion. To be fair, these are modest gains from last year’s EPS of $11.11 on revenue of $54.32 billion.
Still, if you’re looking for a steady anchor to ride out the storm, AbbVie could be it.
On the date of publication, Josh Enomoto 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.
