19 Blue Chip Stocks for Incredibly Reliable Dividends

This article originally appeared on The Financially Independent Millennial and was republished with permission.

Generally, blue chip stocks are those of the highest quality, and many provide reliable dividends. Investors may be familiar with the term blue chip stock. This is because blue chips were traditionally the most valuable at a casino. And while investors should never associate the stock market with gambling, blue chip stocks refer to the best of the best.

Blue chip stocks are often those that pay dividends to shareholders and have increased their dividends each year for at least 10 years in a row. Blue chips offer safe dividends that continue to increase even during economic downturns.

19 Blue Chip Stocks

The following 19 stocks qualify as blue chips, and are among the most dependable stocks for reliable dividends.

1. Johnson & Johnson (JNJ)

No list of blue-chip stocks would be complete without Johnson & Johnson, the largest U.S. healthcare company by market cap.

Johnson & Johnson is a diversified health care company and a leader in the area of pharmaceuticals (~49% of sales), medical devices (~34% of sales), and consumer products (~17% of sales). Further, Johnson & Johnson generates annual sales in excess of $90 billion.

Johnson & Johnson has increased its dividend for 58 consecutive years. With over 50 consecutive years of reliable dividend increases, Johnson & Johnson is on the exclusive list of Dividend Kings.

2. Procter & Gamble (PG)

Procter & Gamble is a consumer staples giant with a large portfolio of leading brands. Some of its notable brands include Pampers, Tide, Bounty, Charmin, Gillette, Old Spice, Febreze, Crest, Oral-B, Olay, and many more. Also, the company generated $71 billion in sales in fiscal 2020.

Procter & Gamble has paid a dividend for 130 years and increased its dividend for 64 consecutive years. This is due in large part to the company’s ability to withstand recessions. For fiscal 2021, Procter & Gamble expects sales growth of 5% -6%. In addition, the company anticipates 8% to 10% core earnings-per-share growth from last year.

3. McDonald’s Corporation (MCD)

McDonald’s is the world’s largest publicly-traded fast food company, with about 39,000 locations in over 100 countries. Moreover, approximately 93% of the stores are independently owned and operated. Its accelerated franchising activity over the past few years has helped boost McDonald’s profit margins, and overall earnings-per-share.

McDonald’s competitive advantage is its global scale, immense network of restaurants, well-known brand and real estate assets.

McDonald’s has raised its dividend every year since paying its first dividend in 1976, qualifying the company as a Dividend Aristocrat. Also, for the full list of all 65 Dividend Aristocrats, click here. Shares currently yield 2.4%.

4. Walmart Inc. (WMT)

Walmart is a discount retail giant, serving around 230 million customers each week. Walmart is one of the most recession-resistant businesses investors will find. Because it focuses on everyday low prices, consumers actually shop more at Walmart when times are tough. This operational strength was evident in 2020, when the coronavirus pandemic wreaked havoc on the U.S. economy.

In the 2020 fourth quarter, total revenue increased 7% as comparable sales grew 8.5% year-over-year. E-commerce is a major growth driver for Walmart, as more consumers take their shopping online. Walmart U.S. ecommerce revenue increased 69% in the fourth quarter.

Walmart also raised its dividend by 1.9% to a new annualized payout of $2.20 per share. This was Walmart’s 48th consecutive year of dividend increases. Also, it approved a new $20 billion share repurchase program.

5. Colgate-Palmolive (CL)

Colgate-Palmolive has been in existence for more than 200 years, having been founded in 1806. It operates in many consumer staples markets, including Oral Care, Personal Care, Home Care, and Pet Nutrition. These segments afford the company more than $17 billion in annual revenue.

Colgate-Palmolive is a blue-chip stock because the dividend is highly safe and reliable. This is a recession-resistant stock given the consistent demand for its products, and its competitive advantage is found in the dominant brands it owns. Also, while Colgate-Palmolive operates in highly competitive product categories, it has a strong share in many of them as well as the ability to maintain pricing power.

6. Hormel Foods (HRL)

Hormel Foods was founded in 1891 in Minnesota. Since that time, the company has grown into a food industry giant with nearly $10 billion in annual sales. The company sells its products in 80 countries worldwide, and a few of its core brands include Skippy, SPAM, Applegate, Justin’s, and more than 30 others.

Hormel is a member of the Dividend Kings, having increased its dividend for 55 consecutive years. Its impressive dividend history is due to its strong brands. Also, according to Hormel, it has nearly 40 brands that are either #1 or #2 in their category.

7. PepsiCo (PEP)

PepsiCo is a global food and beverage company that generates over $70 billion in annual sales. It has a diversified business model that is roughly evenly split between food and beverages. Indeed, the company’s major brands include Pepsi, Mountain Dew, Frito-Lay, Gatorade, Tropicana, and Quaker. PepsiCo has 23 brands that each generate at least $1 billion in annual sales.

2020 was another year of growth for PepsiCo. For 2020, revenue grew 4.8% to $70.4 billion as organic (currency-neutral) sales increased 4.3% for the full year. Adjusted earnings-per-share totaled $5.52, which was essentially flat from 2019. PepsiCo has increased its dividend for over 40 years in a row and currently yields 3.0%.

8. The Coca-Cola Company (KO)

Coca-Cola is a global beverage giant that competes directly with PepsiCo. Coca-Cola is the world’s largest beverage company, as it owns or licenses more than 500 unique non-alcoholic brands. Since the company’s founding in 1886, it has spread to more than 200 countries worldwide. Indeed, its brands account for about 2 billion servings of beverages worldwide every day, producing roughly $36 billion in annual revenue.

Acquisitions are a key component of Coca-Cola’s future growth strategy. For example, Coca-Cola acquired Costa in a $4.9 billion acquisition, which gave it instant exposure to coffee, which is a growth market.

Coca-Cola stock yields 3.3% and the company has increased its dividend for over 50 years in a row.

9. 3M Company (MMM)

3M is a diversified global industrial manufacturer. For example, its most popular consumer brands are Post-It and Scotch tape. In all, 3M manufactures more than 60,000 products that are used every day in homes, hospitals, office buildings and schools around the world.

3M’s Safety & Industrial division produces tapes, abrasives, adhesives and supply chain management software, and manufactures personal protective gear and security products. The Healthcare segment supplies medical and surgical products as well as drug delivery systems. The Transportation & Electronics division produces fibers and circuits, while the Consumer division sells office supplies, home improvement products, protective materials and stationary supplies.

3M has increased its dividend, reliably, for over 60 consecutive years.

10. Kimberly-Clark (KMB)

The Kimberly-Clark Corporation is a global consumer products company that makes disposable consumer products, including paper towels, diapers, and tissues. It manufactures many popular brands, including Huggies, Pull-Ups, Kotex, Depend, Kleenex, Scott, Cottonelle, and Viva.

Kimberly-Clark performed very well in 2020, as the coronavirus pandemic increased demand for products such as facial tissues and paper towels. Fourth-quarter organic sales were up 5%, with net selling prices up 3% along with 2% higher volumes. The company guided for organic sales growth of 1% to 2% for 2021 and for earnings-per-share growth of flat to +3% for the upcoming year.

Along with fourth-quarter earnings, Kimberly-Clark raised its dividend for the 49th consecutive year.

11. Realty Income (O)

Realty Income is a Real Estate Investment Trust, or REIT, which means its business model is to own real estate properties that are leased out to tenants. Some of its biggest tenants include Walgreens, 7-Eleven, Dollar General, FedEx, and Walmart. Realty Income has a high-quality portfolio consisting of over 6,500 properties leased to more than 600 different tenants in 50 industries.

Realty Income has a long history of consistent dividends. Even better, Realty Income pays its dividend each month, rather than the more typical quarterly or semi-annual payment schedules. The company has paid 608 consecutive monthly dividends over its 52-year operating history, and it has raised its dividend 109 times since its IPO in 1994. This REIT’s history of dividend growth and stability makes it a favorite for real estate investing exposure.

12. Clorox (CLX)

Clorox started out over 100 years ago, with the debut of its namesake liquid bleach in 1913. Today, it is a global manufacturer of consumer and professional products than collectively span a wide variety of uses and customers. The company produces annual revenue in excess of $6 billion and it sells its products in more than 100 markets.

In addition to its well-known cleaning brands, Clorox produces food, pet products, charcoal, and a wide variety of other brands. Some of its top brands include Clorox, Hidden Valley, Burt’s Bees, Glad, Kingsford, Fresh Step, and Renew Life.

According to the company, more than 80% of its total revenue comes from products that are either #1 or #2 in their specific category. This results in pricing power, and high profit margins. Clorox is a Dividend Aristocrat currently yielding 2.4%.

13. Consolidated Edison (ED)

Consolidated Edison is a major U.S. utility that delivers electricity, natural gas, and steam to its customers in New York City and Westchester County. It has annual revenues of about $12 billion.

Utility stocks are widely purchased for their stable business models and reliable dividends, and ConEd is no exception. It has increased its dividend for over 40 consecutive years.

While 2020 was a very challenging year for the economy, ConEd proved its resilience by remaining highly profitable and increasing its dividend once again. For the year, revenue declined 2.6% to $12.2 billion, but adjusted earnings-per-share were $4.18 which comfortably covered its dividend. Shares currently yield 4.3%.

14. NextEra Energy (NEE)

NextEra Energy is another utility that also happens to be a Dividend Aristocrat. It is an electric utility with three operating segments: Florida Power & Light, NextEra Energy Resources, and Gulf Power. FPL and Gulf Power are rate-regulated electric utilities that serve about 5.5 million customer accounts in Florida, while NEER is the largest generator of wind and solar energy in the world.

NextEra held up very well in 2020, due to the stable nature of the utility business model. For the full year, the company reported revenues of almost $18 billion, while its adjusted earnings-per-share increased 10.5% for the year.

NextEra Energy expects to increase adjusted EPS by 6%-8% through 2023, while the company anticipates annual dividend growth of 12%-15% per year through 2024.

15. AT&T Inc. (T)

AT&T is a telecommunications conglomerate providing a host of services including wireless, cable and satellite TV, and broadband Internet to over 100 million U.S. consumers and businesses. AT&T acquired Time Warner to give the company exposure to media content. Time Warner’s valuable media properties include TBS, TNT, CNN, HBO, the Warner Bros. studio, and more.

Going forward, 5G rollout and HBO Max are two of AT&T’s most important growth catalysts. AT&T now provides access to 5G to parts of more than 350 U.S. markets, covering more than 120 million people. It also ended 2020 with 41 million combined HBO Max and HBO subscribers in the United States.

AT&T is a Dividend Aristocrat, currently yielding 7%.

16. Altria Group (MO)

Altria Group manufactures tobacco products including the Marlboro cigarette brand in the U.S., as well as chewing tobacco and cigars. It also owns the Ste. Michelle brand of wine.

In response to the long-running trend of declining smoking rates in the U.S., Altria has invested heavily in adjacent categories for growth. Altria purchased a 55% equity stake in Canadian marijuana producer Cronos Group, invested nearly $13 billion for a 35% equity stake in e-vapor manufacturer Juul Labs, and the company owns 10% of Anheuser-Busch InBev (BUD).

Further, Altria will also continue to expand its own heated tobacco products, IQOS and Marlboro HeatSticks, in 2021. Altria has increased its dividend for over 50 years and has a high dividend yield of 7%.

17. Lowe’s Companies (LOW)

Lowe’s is the #2 home improvement retailer in the U.S., just behind The Home Depot (HD). But Lowe’s has an advantage over Home Depot in a key area, its longer history of dividend increases. Lowe’s has increased its dividend for over 50 years, placing it on the Dividend Kings list.

Lowe’s operates nearly 2,000 home improvement and hardware stores in the U.S. and Canada. It performed very well last year, as the continued strength in the housing market combined with the pandemic forcing more people to stay at home. Adjusted earnings-per-share soared 41% in the 2020 fourth quarter.

This growth allowed Lowe’s to increase its dividend by 9% last year, an impressive raise given the weakness of the broader U.S. economy.

18. Emerson Electric (EMR)

Emerson is a global technology and engineering company. Its two operating segments are Automation Solutions and Commercial & Residential Solutions. Emerson manufacturers products that minimize energy usage and waste. The Commercial & Residential Solutions segment makes products that protect food quality and safety.

Emerson Electric is a blue-chip dividend stock, as it has raised its dividend for 64 years in a row, giving it one of the longest streaks in the entire stock market. Shares currently yield 2.3%.

19. Automatic Data Processing (ADP)

Automatic Data Processing is a payroll and human resource outsourcing company. It has over 860,000 clients, in more than 140 countries worldwide. The company provides payroll, benefits administration, and HR management to its clients, and ADP enjoys consistent demand from year to year as these functions are critical for small, midsize and large businesses alike.

ADP should return to growth in 2021 as the economy recovers from the coronavirus pandemic. ADP has increased its dividend for over 40 consecutive years, and the stock has a current yield of 2%.

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