This is a guest contribution by ValueWalk
Building the perfect portfolio takes time and insight into the broader macroeconomics of the stock market. During times of economic uncertainty, and increased volatility, building and managing a portfolio with increased returns and a safe bet against turbulent economic conditions is a challenge.
The market is full of different investors, some who enjoy high-growth value stocks, while others tend to play it safe, investing in household names that offer them better security. The plethora of seasoned investors tends to seek out stocks that offer them some sort of hedge, or protection when market conditions are near correction territory.
At the same time, external factors such as company performance, and the broader economic conditions of the consumer market also play a big role in what investors look to purchase.
A good example of how external factors can influence investors’ sentiment, is the recent interest rate hike of 0.75 percentage points, the biggest increase since 1994. The decision by the central bank to hike its benchmark interest rate is to help soften the rampant inflation American consumers are currently facing.
Aggressive hikes such as these tend to lead investors into changing their market sentiment, and course of investment.
Stocks that can perform amid economic difficulties, such as a looming recession or bear market, tend to have better investor sentiment. So far, 2022 has been a tumultuous year for the stock market, and it’s looking to become even more uncertain as experts suggest that America is heading into a recession.
With the market outlook sinking to new lows, and investors looking to move their cash from the stock market, rather than parking it in safer, less volatile places, it’s perhaps time that smaller, less seasoned investors look to do the same.
With this in mind, here’s a look at some of the top blue-chip stocks with a high 4%+ yields for safe income.
Philip Morris International Inc. (PM)
As one of the leading manufacturers and distributors of cigarettes, cigars, fine-rolling tobacco, snuff, and smoking accessories worldwide, Philip Morris is perhaps a safe choice for investors looking for a company with a 4%+ yield.
For starters, PM is priced well, averaging between $85.64 (52-week low) and $112.48 (52-week high). At the start of 2022, PM offered a 4.88% dividend yield, and in their latest earnings call, PM yielded $1.25 with a P/E ratio of 16.95. The latest figures indicate that PM has a dividend yield of 4.71%, a bit lower than earlier in the year, but still a safe bet in the current market conditions.
Besides the United States, Philip Morris holds substantial influence over the tobacco industry, especially in Europe and African markets.
Verizon Communications (VZ)
As one of the three largest telecommunications companies in the United States among T-Mobile and AT&T, Verizon is perhaps the only of the picks that have held stable performance amid market turbulence.
Besides that VZ currently has an annual dividend yield of 5.22%, other market leaders such as AT&T have cut their dividends as it undergoes corporate restructuring, and T-Mobile Inc. does not even offer dividends.
Verizon currently holds 40% of the American postpaid phone market and has in recent years increased its fiber occupation in major U.S. metros. Some investors feel that Verizon has tangled itself by offering consumers a mixed amount of services and products, which can be difficult to manage and retain revenue from. On the other hand, the company has a steady growth strategy that has delivered better profitability than its rivals.
Exxon Mobil Corporation (XOM)
Major oil refiners and gasoline producers have seen profits hit new records in recent months amid the ongoing geopolitical tension between Ukraine and Russia. With gas prices at record-shattering highs, even higher than the 2008 financial crisis, a safe bet is reliable energy companies that offer increased dividend yields.
Current XOM shares offered a 4.33% dividend yield, and stocks are priced relatively low considering the return investors are getting. As one of the world’s largest publicly traded international oil and gas companies, XOM has seen prices fluctuate between $52.10 and $105.57 per share over the last 52 weeks.
Exxon proves to provide a solid investment, low-lying prices, and high dividend yields for a company that’s globally recognized. The company is a household name when it comes to energy, gas, and oil.
Iron Mountain Incorporated (IRM)
Founded back in 1951, Iron Mountain Incorporated is an American information management services company headquartered in Boston, Massachusetts.
Iron Mountain Inc., is perhaps one of the few publicly traded companies that have managed to outperform Wall Street estimates. In its Q1 2022 earnings call, IRM surpassed predicted EPS by 1.54% and revenue by 1.04%. Iron Mountain stocks currently offer a 5.35% dividend yield as of June 2022.
The company operates in more than 58 countries with offices in Africa, Asia, Europe, and Latin America.
International Business Machines Corporation (IBM)
The multinational tech giant came under direct line of fire in recent weeks, as the broader market saw a wave of investors pulling out of tech stocks, sparking a major tech sell-off.
While the market has in time recovered, IBM has managed to gain some of its earlier losses. Even during the height of the major tech sell-off, IBM saw share prices tumble by 6.68%. Shares started June on a high note but have since remained relatively consistent in the $140.00 and $135.00 per share zone.
Currently, IBM offers a 4.89% dividend yield as of June 2022. In its Q4 2021 earnings call, IBM managed to outperform market estimates by $730.50 million with post earnings per share surpassing $3.35 on $16.70 billion revenue.
National Health Investors, Inc. (NHI)
NHI is best known as a real estate investment trust that specializes in sale-leaseback and joint venture financing, for need-driven senior housing and medical investments. National Health Investors has a solid balance sheet and is quite reasonably priced.
At the start of 2022, NHI had a dividend yield of 6.34%, the highest among blue-chip offerings. Their dividend yield has come down slightly, edging closer to 5.90% in recent weeks.
Stock prices have also increased by 9.91% over the last six-month period, with a 52-week average of $50.22 (low) and $69.23 (high). NHI is perhaps a safer bet for starter investors, who are looking to increase their portfolio yield without having to run major risks.
Why Should You Include Blue Chip Stocks In Your Portfolio?
For most investors who are looking to build a balanced portfolio that has increased value with less risk, blue-chip stocks offer a safe foundation in volatile market conditions.
When market sentiment is swaying in various directions, blue-chip offerings can be considered a lower risk than per se high valued tech companies that tend to grow slower during a market downturn.
What Are The Characteristics Of Blue-Chip Stocks
As already mentioned, blue-chip stocks can offer investors a lower-risk investment opportunity when the market is volatile.
Some of the characteristics of blue-chip stocks include well-established companies, marketplace leaders, a strong balance sheet, reputable market reputation, leaders in their field of expertise, and oftentimes pay dividends to their shareholders.
While the last characteristic is true, some blue-chip companies may offer dividend payouts to shareholders based on their performance. While some may have a dividend yield above 4%, there are those larger publicly traded companies that can offer lower dividends, anything closer to 0.9%, 1%, or 2%.
Are Blue-Chip Stocks A Safe Bet In Current Market Conditions?
The answer may offer a mixed bag of results, but blue-chip stocks can be both risky and a safe option for any type of investor.
For novice investors, there should be a clear distinction between what is considered a “safe” or “secure” investment opportunity. In the world of investments, nothing is for sure, and trading on the public market does come with its inherent risks regardless of expertise and market knowledge.
Consider choosing blue-chip companies that have a solid track record, that offers increased dividends, and that are constantly looking to develop and innovate their marketplace.
The Bottom Line
Market conditions may have inched closer towards correction territory, and while many estimate that the current bear market is a result of overstimulating the economy during the early months of the pandemic and a rapid increase in consumer spending – nothing is a given when it comes to trading.
Novice investors should consider their current standing in the market, and where they would enjoy the most beneficial growth in the long term.
Investing in blue-chip companies does come with some form of risk, but when market sentiment is lower, these are perhaps the safer options for long-term growth.
Other Dividend Lists
The following lists contain many more high-quality dividend stocks:
- The Dividend Aristocrats List is comprised of 65 stocks in the S&P 500 Index with 25+ years of consecutive dividend increases.
- The High Yield Dividend Aristocrats List is comprised of the 20 Dividend Aristocrats with the highest current yields.
- The Dividend Achievers List is comprised of ~350 stocks with 10+ years of consecutive dividend increases.
- The Dividend Kings List is even more exclusive than the Dividend Aristocrats. It is comprised of 44 stocks with 50+ years of consecutive dividend increases.
- The High Yield Dividend Kings List is comprised of the 20 Dividend Kings with the highest current yields.
- The Blue Chip Stocks List: stocks that qualify as Dividend Achievers, Dividend Aristocrats, and/or Dividend Kings
- The High Dividend Stocks List: stocks that appeal to investors interested in the highest yields of 5% or more.
- The Monthly Dividend Stocks List: stocks that pay dividends every month, for 12 dividend payments per year.
- The Dividend Champions List: stocks that have increased their dividends for 25+ consecutive years.
Note: Not all Dividend Champions are Dividend Aristocrats because Dividend Aristocrats have additional requirements like being in The S&P 500. - The Dividend Contenders List: 10-24 consecutive years of dividend increases.
- The Dividend Challengers List: 5-9 consecutive years of dividend increases.
