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3 Blue-Chip Stocks With Rock-Solid Dividends

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·4-min read
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Investing in blue-chip stocks is a stellar strategy. Blue-chip stocks are companies that have consistently provided quality, reliability, and the ability to operate profitably in both good and bad times.

Additionally, they generally carry robust dividend metrics – another major perk for investors.

Three companies that fit the parameters – Pfizer PFE, Caterpillar CAT, and Johnson & Johnson JNJ – would all be excellent selections for investors seeking a stream of income paired with solid growth prospects.

The chart below illustrates the year-to-date performance of all three companies while blending in the S&P 500 as a benchmark.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

Let’s take a look at each company a little closer.

Caterpillar

Caterpillar CAT is the world’s largest construction-equipment manufacturer. The company designs, develops, engineers, manufactures, markets, and sells machinery, engines, financial products, and insurance to customers. The company is a Zacks Rank #3 (Hold) with an overall VGM Score of an A.

CAT has increased its dividend in 28 consecutive years, meeting the demanding requirements to join the elite Dividend Aristocrat group.

The company’s annual dividend yields 2.6%, with a payout ratio sitting sustainably at 41% of earnings. Additionally, the company has a notable 8.9% five-year annualized dividend growth rate.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

As it stands, CAT is projected to register substantial growth. For the current fiscal year (FY22), the Zacks Consensus EPS Estimate resides at $12.70, reflecting a stellar 18% year-over-year uptick.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

The growth doesn’t stop there – CAT is forecasted to generate a mighty $57.5 billion in revenue in FY22, good enough for a double-digit 13% uptick from FY21 annual sales of $50.9 billion.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

Johnson & Johnson

Johnson & Johnson JNJ is an American multinational corporation that develops medical devices, pharmaceuticals, and consumer packaged goods. The company is a Zacks Rank #3 (Hold) with an overall VGM Score of an A.

JNJ has increased its dividend for 60 consecutive years, making it not just a Dividend Aristocrat but a Dividend King as well – Dividend Kings have raised dividends for at least 50 straight years.

The company’s annual dividend yields 2.6%, with a payout ratio sitting sustainably at 45% of earnings. Additionally, the company has a five-year annualized dividend growth rate of a notable 6%. Johnson & Johnson’s yield is much higher than the S&P 500’s.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

Of course, the titan is forecasted to grow at a solid pace – for the current fiscal year (FY22), earnings are expected to climb a respectable 3%.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

Pivoting to top-line projections, the annual revenue estimate of $95 billion for FY22 pencils in a modest 1.5% year-over-year uptick. The chart below illustrates the company’s revenue on an annual basis.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

Pfizer

Pfizer PFE is a multinational pharmaceutical and biotechnology corporation headquartered in New York City, well-known for its COVID-19 vaccine. The company is a Zacks Rank #3 (Hold) with an overall VGM Score of an A.

Pfizer’s annual dividend yield sits enticingly at 3.2%, well above that of the S&P 500. In addition, the company’s payout ratio sits very sustainably at 26% of earnings, with an annualized five-year dividend growth rate of 4.7%.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

The company has stellar growth projections. For the current fiscal year (FY22), the Zacks Consensus EPS Estimate resides at $6.54, reflecting a sizable 48% double-digit year-over-year uptick.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

Top-line projections are rock-solid as well – PFE is forecasted to rake in $101.3 billion in revenue in FY22, a 25% year-over-year jump compared to FY21 annual sales of $81.5 billion. The chart below illustrates the company’s revenue on an annual basis.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

Bottom Line

In addition to solid dividend payouts and consistent growth, blue-chip stocks are typically less volatile as well, another major perk for investors.

All three companies above had solidified themselves as titans in their respective industries.

In addition, all three companies have repeatedly reported quarterly results above expectations, and current fiscal year growth is inspiring.

For investors looking to add an additional layer of defense into their portfolio paired with solid growth and handsome dividend payouts, Caterpillar CAT, Johnson & Johnson JNJ, and Pfizer PFE would all fit those parameters.


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Caterpillar Inc. (CAT) : Free Stock Analysis Report
 
Johnson & Johnson (JNJ) : Free Stock Analysis Report
 
Pfizer Inc. (PFE) : Free Stock Analysis Report
 
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