What Blue Chip Stocks Pay The Highest Dividends

What Blue Chip Stocks Pay The Highest Dividends – High dividend blue chip stocks provide an easy and safe way to build wealth and earn strong returns over a long period of time.

In an age of instant gratification, flash trading and promises of instant wealth by investing in the latest unicorn IPO, tried-and-true investment techniques to slowly build long-term wealth still work. Some get-rich-quick schemes occasionally bear fruit and provide instant wealth. However, the low rates of these investments and the high risk of these investments are too much for most people, who are generally risk-averse and willing to accept a slightly lower total return in exchange for lower risk and a higher success rate, which is certain. Which offers high-dividend shares.

What Blue Chip Stocks Pay The Highest Dividends

What Blue Chip Stocks Pay The Highest Dividends

Investors borrowed the term “blue chip” from gambling, where the highest value poker chips are traditionally blue. The exact origin of the phrase in investment terms is unknown. However, one version claims that in the 1920s, an early employee of the company that would evolve into Dow Jones saw many stock trades at prices well above average prices at the time. This employee called these stocks blue-chip stocks. Originally used only as a term for stocks with high share prices, the term was developed to refer to high-quality stocks that can provide reliable returns over a long period of time and resist large declines during economic downturns and bear markets.

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Unlike official market indices such as S&P 500, NASDAQ Composite, FTSE 100, which have specific requirements, blue-chip stocks are not strictly defined and investors use different criteria to define such stocks. However, even without a specific definition, indexes such as the Dow Jones Industrial Average (DJIA) or other lists of stocks with consistent long-term growth, such as Dividend Aristocrats, provide a selection of stocks that justify the designation of high dividend stocks. .

Regardless of the list or index of high dividend stocks, these lists are only a starting point for any investment analysis. As with any investment decision, investors must conduct their own research and due diligence to identify stocks that meet the specific and unique needs of their investment portfolio strategy.

Below is a list of five high dividend blue chip stocks to start your analysis. For other stocks to consider, read our article on 7 High Dividend Stocks You Should Buy Now.

In the second quarter of 2020, Cisco Systems increased its quarterly dividend payment by 2.9% from $0.35 to the current distribution amount of $0.36 and has maintained the payout level ever since. This new quarterly dividend translates to a total annual payout of $1.44 and a dividend yield of 3.2%, which is in line with the company’s own average of 3.02% over the past five years.

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The company has been increasing its annual payout every year since dividend distribution began in 2011. .

Cisco’s stock price hit a 20-year low in late 2002 after the dot-com crash. Despite occasional volatility, including a 50% decline after the 2008 financial crisis, the share price has more than quintupled from its 2002 low. The share price has doubled in the last five years. An overall market correction in early 2020 meant the stock suffered a 2.5% loss, but its three-year return is 23.6% and the overall outlook is still very positive.

A staple of blue-chip stocks for decades, The Coca-Cola Company continues to reward its shareholders with a combination of substantial dividend payments and consistent long-term appreciation. The company has been rewarding its shareholders by distributing dividend income for over 125 years. Furthermore, with 58 years of consecutive annual dividend increases, The Coca-Cola Company is not only a dividend king, but also a member of a small group of dividend kings who have had more than five decades of consecutive annual dividend increases. .

What Blue Chip Stocks Pay The Highest Dividends

Over the past two decades, the company has increased its annual dividend amount fivefold, with an average annual growth rate of 8.4%. Even over the last five years, the dividend growth rate is still 4.4% per year. The current quarterly payout of $0.41 corresponds to an annual payout of $1.64 and a yield of 3.3%.

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A downturn in the restaurant industry in 2020 has negatively impacted Coca-Cola’s recent returns, which show a 9.1% loss over the past 12 months. But over the past three and five years, the company has returned 18.3% and 38.9%, respectively.

Another dividend aristocrat, Caterpillar has continued its streak of annual dividend increases by raising its dividend nearly 20% from its previous payout of $0.86 to its current payout of $1.03. This new payment amount translates to an annual distribution of $4.12 and currently yields 2.1%. Over the past 20 years, the company has increased its annual dividend payout more than six times for an average annual growth rate of nearly 10%. The current dividend payout ratio of 67.9% is significantly lower than the company’s own five-year average, but not far from the 50% limit considered a sustainable payout.

Caterpillar, Inc. The last 12 months have seen great success – its one-year return was 38.3%, while the company’s three-year growth was 26.2%. Its five-year returns are nothing to scoff at, rewarding long-term investors with a return of 276.2%, nearly quadrupling its initial price.

At the start of 2019, Chevron increased its dividend distribution by 8.4%, from last year’s quarterly total of $1.19 to this year’s quarterly distribution of $1.29. This current quarterly amount corresponds to an annual distribution of $5.16 and a dividend yield of 5.4%, which is in line with the company’s five-year average yield.

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Following its 1913 dividend distribution, Chevron has provided annual dividend increases for the past 34 consecutive years. Over the past two decades, the company has nearly quadrupled its total annual dividend, corresponding to an average annual growth rate of 7%.

Additionally, the company has reduced its dividend payout ratio by an average of 220% over the past five years and from 82% last year to a current payout ratio of 61%. Although slightly above the 50% level considered sustainable, Chevron’s payout ratio is moving in the right direction, suggesting that the company’s earnings will be sufficient to cover future dividend increases.

The company has increased its quarterly dividend payout amount by 1.6% from the distribution of $0.62 quarterly dividend in the previous period to the next dividend payment of $0.63 in February 2021. This new quarterly dividend payment equates to an annual distribution of $2.51 and a dividend yield of 4.4%.

What Blue Chip Stocks Pay The Highest Dividends

Even with increased dividend payments, Verizon’s current yield is slightly below the company’s five-year average yield of 4.5%, as asset values ​​have outpaced dividend growth over the past year. After six years of flat annual dividend distributions from 1999 to 2004, Verizon has paid 14 consecutive annual dividends. A dividend advance of 60% during that period corresponds to an average growth rate of 2.4%.

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Despite the increased volatility, Verizon’s share price still gained 0.7%, giving it a total return of nearly 5.1% over the past 12 months, combined with its dividend income payout. Total returns have exceeded 24% in the last three years. Furthermore, the five-year total return will reach 62%.

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Ned Piplovic is an associate website content editor at Eagle Financial Publications. He graduated from Columbia University with a BA in Economics and Philosophy. Prior to joining Eagle, Ned spent 15 years in corporate operations and financial management. Ned writes for www.StockInvestor.com. A blue chip stock is a huge company with a great reputation. These are usually large, well-established and financially sound companies that have been in business for many years and have reliable earnings, often paying dividends to investors. A blue chip stock typically has a market capitalization in the billions, is usually a market leader or one of the top three companies in its sector, and is often a household name. For all these reasons, blue chip stocks are the most popular to buy among investors. Some examples of blue chip stocks are IBM Corp., Coca-Cola Co. and Boeing Co.

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Although dividend payments are not absolutely necessary for a stock to be considered a blue chip, many blue chips have a long track record of consistent or increasing dividends. The term is believed to originate from poker, where blue chips are the most expensive chips.

Blue chip stocks are usually a component of the most popular market indices or averages

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