Best Blue-Chip Dividend Stocks for Investors to Buy Now

Blue-chip stocks are shares of well-known and financially sound companies. What are the best blue-chip dividend paying stocks to buy now?

Ambrish Shah - Author

Feb. 10 2021, Updated 1:56 p.m. ET

Best blue-chip dividend stocks
Source: istock

Blue-chip stocks are shares of well-established and high-quality companies that are pioneers in their sectors. However, not every blue-chip company distributes a dividend at regular intervals. Let's take a closer look at the best-performing blue-chip dividend stocks to buy now.

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Dividends are regular payments made to shareholders from a company’s net profit. Most of the dividend stocks pay investors a fixed amount each quarter. The top ones raise their payouts over time so that investors can create an annuity-like cash stream. Blue-chip dividend stocks can add stability to an investor’s portfolio. These stocks can be one of the most promising investment opportunities for regular income and capital appreciation.

blue chip stocks
Source: istock
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What are blue-chip stocks?

Blue-chip stocks are shares of fundamentally strong and financially sound companies. These companies have large market capitalization and an enviable market reputation. Blue-chip stocks usually have the following things in common.

  • Blue-chip stocks are often large-cap stocks, which usually means they have a market capitalization of over $10 billion.
  • Blue-chip stocks have a reliable and strong background of sustained growth as well as positive future prospects.
  • Blue-chip stocks are a part of major market indexes like the Dow Jones Industrial Average, the Nasdaq 100, or the S&P 500.
  • Most of the blue-chip stocks reward their shareholders with consistent and increasing dividends.
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Which blue-chip stocks pay dividends?

When building a dividend portfolio, it's better to have it diversified across multiple industries instead of concentrating on stocks that offer the highest dividend yields. The following are some of the best blue-chip dividend stocks to buy in 2021.

  • Worth about $400 billion, Johnson & Johnson (JNJ) pays a 2.6 percent dividend yield, which is around double the rate that U.S. 10-year Treasurys pay. JNJ is best known for its famous consumer products like baby shampoo, band-aids, and Tylenol. The company generates regular income from its business operations in pharmaceuticals and medical devices. In 2021, analysts expect the company’s EPS to rise by about 12 percent.
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  • JPMorgan Chase is one of the largest investment banks and financial services providers in the U.S. The company is worth more than $400 billion and pays a 2.5 percent dividend yield. Currently, JPMorgan Chase uses about 47 percent of its earnings to distribute dividends, which leaves a significant cushion for challenging times and room to raise the dividend in the future.
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  • AT&T is one of the largest wireless service providers in the U.S. The company is worth more than $200 billion and pays a 7.3 percent dividend yield. AT&T generates regular income from its wireless phone and broadband subscribers. AT&T also owns subscription video-on-demand streaming service HBO Max. 

The other blue-chip dividend stocks to buy now are Walt Disney, Apple, AbbVie, 3M, Procter & Gamble, Lowe’s, Walmart, and Coca-Cola.

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investing in blue chip stocks
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How to invest in blue-chip stocks

Investors can buy blue-chip stocks through brokerage companies like Robinhood, TD Ameritrade, and E-Trade. Investors can directly buy shares after consulting with an investment adviser or performing their own research on the best blue-chip dividend stocks. Evaluate the company’s historical financial performance to understand the dividend payments and earnings trend. Investors can even purchase a basket of stocks by investing in ETFs or mutual funds. 

Outlook for blue-chip stocks

Usually, blue-chip stocks have an excellent long-term outlook. Their features make them more likely to survive any downturn in the markets. Blue-chip companies know how to handle even the most challenging situations. In contrast, small-cap companies might not survive a significant fall in revenue or the prolonged impacts of a recession.


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