Political tensions have intensified, with Vice President Kamala Harris narrowing the gap in the race against former President Donald Trump. This uncertainty positions stable dividend stocks as wise choices for investors looking to protect their portfolios against volatility in this uncertain political climate.
Top large-cap dividend stocks can stand out from the rest. Size matters when it comes to investing. The three companies I’m going to discuss on this list are certainly among the mega-cap names that benefit most from scale in this current market environment.
These companies provide dividend yields that may be easily overlooked. For many income investors, there are certainly better-yielding options in the market. But for equity investors seeking total returns (a mix of capital appreciation and dividend income), these are among the best picks in the market, at least in my view.
Without further ado, let’s dive into why these large-cap dividend stocks are worth considering right now.
PepsiCo (PEP)
One of the top choices for investors seeking large-cap dividend stocks is beverage giant PepsiCo (NASDAQ:PEP). Due to its strong branding and diverse product lines, Pepsi has proven resilient to market downturns. Notably, the company also has a strong and consistent dividend history. The company impressively raised its dividend by 7%, marking its 52nd consecutive year with an increase.
PepsiCo COO Gregg Roden emphasizes that during his 34 years with the company, the past three years have seen some unprecedented changes. The pandemic led to a consumer shift from grocery shopping to online, pressuring Pepsi to expand its product line and adapt to new consumer trends.
Pepsi has generated more than $91 billion in revenue from its world-class brands like Gatorade and Lay’s. Although the company surpassed market estimates in early 2024, Frito Lay and beverage volumes declined due to consumer resistance and inflation. According to Athina Kanioura, Pepsi’s chief strategy officer, the investments Pepsi makes in seed-to-shelf supply are crucial to gaining profits. Agricultural practices will be necessary, plus partnering with tech firms for Pepsi to enhance its efficiency.
Berkshire Hathaway (BRK-A, BRK-B)
When it comes to stability during market downturns, Warren Buffett’s Berkshire Hathaway (NYSE:BRK-A, NYSE:BRK-B) is a top pick to consider. The company doesn’t pay a dividend, so that’s important to point out (considering it’s on this list of large-cap dividend stocks to buy). However, the company’s diversified portfolio holds many dividend-paying stocks. Berkshire has utilized these stocks to buy shares of other companies, compounding its growth over time.
That’s not to say Berkshire is fully invested by any means. After recent sales, the company’s cash pile has grown to more than $275 billion. Accordingly, the dividend income Berkshire receives acts as even more dry powder to buy the dips, which is what Buffett is truly famous for.
Berkshire’s cash hoard officially hit a record, with questions now building around where the Oracle of Omaha and his team will allocate that capital. I’m not so worried about what the next major deal will be. Rather, I’m confident that the company will find a good place to put its capital to work when the time comes.
Over the long term, Berkshire Hathaway has proven to be a great redistributor of capital, mostly via share buybacks. I don’t expect that to change moving forward. But if the company were to ever issue a dividend, I think the demand for Berkshire stock could go through the roof.
Meta Platforms (META)
Investors welcomed Meta Platforms’ (NASDAQ:META) AI spending, boosting shares despite ongoing metaverse costs. Meta’s Reality Labs lost $4.5 billion this quarter, but AI investments are seen favorably.
Meta’s CEO Mark Zuckerberg emphasized Meta AI’s potential. He believes it could be the next big thing in the AI space, as its AI assistant can become the leader by year-end 2024. The company’s revenue recently reached $39 billion, with capital spending also expected to be around $40 billion. So far, META has surged 40% in 2024, and the stock does provide a very small dividend to entice long-term investors to jump aboard.
I think META stock will always represent more of a growth than a dividend play. But the fact that the company just initiated a dividend should bode well for long-term investors. Additional demand from certain institutional fund managers with various investing criteria should also bode well for the company over time.
On the date of publication, Chris MacDonald did not hold (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.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
