Best Blue-Chip Dividend Stocks to Invest in

Retired and income investors are well aware of the advantages of blue-chip dividend stocks. In addition to the steady stream of income provided by the stocks, blue-chip dividend stocks have another advantage. For instance, most blue-chip dividend stocks tend to do better than other stocks in a downturn.

Investors know blue-chip stocks to be well-known companies with a long history of steady profits. They’re also typically huge companies in terms of market cap, and they are usually leaders in the markets they serve. People expect them to remain on top for the foreseeable future.

Many times, blue-chip stocks pay a dividend. A dividend happens when a company uses the cash flow from the business and distributes part of it to shareholders. Savvy dividend investors may compare the dividend and cash flow of the company (payout ratio) to ensure there is enough cash flow to pay the dividend sustainably.

Another comparison that dividend and income investors make is the dividend and stock price. When you divide the dividend by the stock price, you get the stock’s dividend yield. A stock’s dividend yield tells you your rate of return based on dividends alone.

Not all blue-chip stocks pay a dividend, of course. But the ones that do can be a source of dividend income for many years. If you’re interested in blue-chip stocks, below are a few to consider.

Three Best Blue-Chip Dividend Stocks

The three stocks listed below could be the best blue-chip dividend stocks. Each company is a giant in its industry and has paid consistent dividends over the years.

No. 3 McDonald’s (NYSE: MCD)

The maker of the Big Mac, McDonald’s, has over 37,000 restaurants in 119 different countries. McDonald’s restaurants are operated by franchisees who keep the profits from the stores. In return for running the restaurants, franchisees pay McDonald’s royalties and franchise fees. In addition, McDonald’s owns most of the buildings, and franchisees rent them from McDonald’s. The company has a market cap of over $180 billion. This blue-chip dividend stock pays a dividend yield of 2.2%.

No. 2 Proctor & Gamble (NYSD: PG)

Proctor & Gamble is the maker of many a long list of popular branded household products. Its brands include Luvs and Pampers diapers, Bounce and Downy fabric softeners, Gain and Tide laundry detergents, Charmin toilet paper, Bounty paper towels, Gillette shavers, Head & Shoulders shampoo, Old Spice skincare and many more. In addition, the products that Proctor & Gamble sells are purchased repeatedly by customers. The company has a blue-chip market cap of $350 billion and sports a dividend yield of 2.5%.

No. 1 American Express (NYSE: AXP)

Folks who travel for business or pleasure love their American Express credit cards. American Express’s credit cards offer perks like airline miles to cardholders. Over the last several years, the company has expanded to credit cards, loans, and checking accounts for business owners. In addition, younger cardholders have increasingly used American Express’s credit cards. The dividend yield on its stock is 1.25%.

Keep reading for more on blue-chip dividend stocks.

Three Best Blue-Chip Dividend Stocks to Buy and Hold

Below are three blue-chip dividend stocks to buy and hold. The companies are leaders in their industries. They’re also mega-cap stocks that could pay a dividend for many years.

No. 3 Apple (Nasdaq: AAPL)

Most readers are probably familiar with Apple, the maker of the iPhone. Decades ago, the company put computers into customers’ hands with the McIntosh. Apple has kept up its dominant position in electronics with the iPad, iMac and iPod. The company also sells subscription services like AppleTV and iTunes. Apple has a market cap of over $2 trillion, making it one of the largest companies in the world. The stock’s dividend yield is a modest .63%.

No. 2 Nike (NYSE: NKE)

Readers may also know this blue-chip dividend stock by its iconic basketball shoes and sports apparel. Each has the easily recognized Nike swoosh. Nike put itself on the map in the mid-eighties when it signed brand sponsor Michael Jordan. The signing changed the company forever as it kept signing the NBA’s biggest stars to wear Nike. Nike’s market cap is about $190 billion, a fraction of Apple but still blue-chip. In addition, the stock sports a dividend yield of 1%.

No. 1 Walmart (NYSE: WMT)

Its customers know Walmart as the retailer with the lowest prices. The company’s blue big-box stores are located all over the U.S. and in foreign markets. Walmart also runs wholesale grocer Sam’s Club. This year, the stock is down about 13% to $125 per share and pays a $2.24 annual dividend. That means the stock has a dividend yield of about 1.8%.

Three Blue-Chip Dividend Aristocrats

These three blue-chip Dividend Aristocrats have paid an annual dividend for more than 25 years in a row. On top of that, each has increased its dividend in each of those years. The definition of a Dividend Aristocrat is a company that has paid and increased its dividend for at least 25 years in a row. Though there is no guarantee that a Dividend Aristocrat will keep paying a dividend in the future, these companies’ long track record gives investors comfort that the dividend is steady and reliable.