3 High-Dividend Blue Chip Stocks to Watch Now
In some ways, high-dividend blue chip stocks represent the best of two worlds for investors. First, you get the stability and reliability of blue chip stocks. And second, you get a steady income from high dividends. These reasons are why many investors buy these stocks.
Blue chip stocks represent some of the biggest players in business, like Google (Nasdaq: GOOG), Coca-Cola (NYSE: KO) and General Mills (NYSE: GIS). They are industry leaders, household names and stocks that should be profitable investments for a long time to come.
High-dividend stocks are stocks that pay out a high dividend to their shareholders on a regular basis. While the average dividend yield in the stock market is in the mid-2% range, a high-dividend stock is going to pay out significantly more than that.
In this article, we will take a look at three high-dividend blue chip stocks that are worth watching. Two are major players in the telecommunications industry, while the third is a major pharmaceutical company.
So without further ado, here are the top three high-dividend blue chip stocks to watch in 2020.
High-Dividend Blue Chip Stocks to Watch
1. AT&T (NYSE: T)
It’s true that investors have been down on this high-dividend blue chip stock for quite some time. And there’s good reason for that.
Since last August, AT&T’s stock has been down roughly 14%. Year to date, that loss is even greater, at 23%. But as it’s currently trading around $30 with a high dividend yield of nearly 7%, AT&T may still be an attractive stock to watch.
This media, mobile and broadband conglomerate with a subscriber base of 160 million people has been hit hard by COVID-19. The media division, which includes the acquisition of WarnerMedia, had to shut down most of its production while telecom stores were closed due to decreased international travel.
But here, we look forward, not backward. AT&T has one of the most attractive entertainment portfolios in the business, and it can leverage products like the streaming service HBO Max to deliver them as production on new materials ramps back up. Furthermore, the company will continue to roll out 5G technology in new markets. This stands to benefit the company as 5G becomes the new wireless infrastructure standard.
Finally, the company has seen dividend growth of 2.2% for over 35 years. While some see that as modest dividend growth, it puts AT&T’s stock firmly in the camp of the dividend aristocrats.
2. Verizon Communications (NYSE: VZ)
Yes, this high-dividend blue chip stock is another telecom player. No, it’s not because I am obsessed with telecom. Yes, it might be because I am slightly obsessed with Verizon (after all, I am a long time Verizon Wireless customer). Verizon’s stock is currently trading just under $60 and is yielding a solid 4.14% dividend.
Unlike AT&T, Verizon has not made a large play to buy up content creation for streaming services. Rather, it chooses to partner for this content and often includes it for free with its wireless subscriptions. For example, many Verizon Wireless customers get a Disney premium bundle of Hulu, Disney+ and ESPN+, as well as Apple Music included with their wireless subscriptions. (I pay for my Hulu, but it’s well worth it.)
At the same time, Verizon continues to invest in its best business – Verizon Wireless. Not only does it dominate the current 4G market, but it’s investing heavily in 5G infrastructure to remain dominant in wireless technology going forward. As the 5G revolution continues to roll out worldwide, Verizon Communications stands to benefit greatly. And despite its lower dividend yield, Verizon may wind up being the stronger stock play in the future by a significant margin.
3. AbbVie (NYSE: ABBV)
Now we’ll veer from telephone tech to bio and pharmaceutical tech.
The third high-dividend blue chips stock on our list today is AbbVie. A couple of similarities AbbVie has with AT&T and Verizon are its terrific dividend numbers and its long-term potential for profitability. AbbVie is currently trading around $94, with a dividend yield of 5%.
AbbVie is no fly-by-night biotechnology company, and it’s not just trying to race for a vaccine to solve the coronavirus pandemic. A 2013 spinoff from Abbott Laboratories (NYSE: ABT), AbbVie is a growing financial powerhouse built for the future. Over the past year, it has grown its earnings per share (EPS) by 66%, from $2.74 to $4.53, while also growing its revenue.
If that isn’t enough reason to pique your interest, how about the fact that insiders at the company also seem to love the stock? Over the past year, insiders have purchased shares of AbbVie to the tune of $1.1 million, with no significant selling. If the insiders are buying, that’s a terrific sign.
Meanwhile, the dividend is more than safe and stable. This dividend aristocrat has been steadily increasing its dividend for 47 straight years (including its time as part of Abbott). Given its current financial position and moderate payout ratio, there’s reason to think this dividend growth could be sustained long into the future.
Concluding Thoughts on High-Dividend Blue Chip Stocks
High-dividend blue chip stocks can be a great option for investors looking for the stability and power of blue chips plus the income potential of high dividends. The three stocks we’ve discussed could be particularly well-positioned to do well in the coming years.
Here at Investment U, we cover what’s going on in the world of high-dividend blue chip stocks every weekday in our free Investment U e-letter. You can subscribe to the e-letter by entering your email in the subscription box below.
If you’re looking for great companies that pay regular income, it’s hard to go wrong with investing in high-dividend blue chip stocks. If you’re looking for more ideas, check out the next article in this series on blue chip stocks: a list of the best blue chip stocks.
About Brian M. Reiser
Brian M. Reiser has a Bachelor of Science degree in Management with a concentration in finance from the School of Management at Binghamton University.
He also holds a B.A. in philosophy from Columbia University and an M.A. in philosophy from the University of South Florida.
His primary interests at Investment U include personal finance, debt, tech stocks and more.