9 of the best Blue Chip Dividend Stocks

stock chart with pen and paper

Blue Chip Dividend Stock Picks for 2022

Here are my Blue Chip stock picks for 2022, each of them pay a dividend of 1.5% or more. Rather than pick only high yielding stocks, I chose those with relatively low payout ratios and somewhat reasonable valuations. Lower payout ratios ensure that the companies will continue to grow their dividends at a decent pace.

What do I mean by Blue chip stocks? Large cap companies that have a long history. These companies are often seen as safe and have a history of paying increasing dividends for many years.

Here is the list

  • Caterpillar
  • Cisco
  • Intel
  • Home Depot
  • Fedex
  • Lowe’s
  • UPS
  • JP Morgan
  • United Health

Caterpillar

Dividend Yield-2.06%

Payout Ratio 36%

P/E Value = 18.26

CAT just barely breaks through the 2% yield mark; P/E is reasonable and despite its history, it still has more fuel in the tank to grow the dividend.

Caterpillar is of course involved in Construction and an Industrial stock. You can see here below how from March 2020 that CAT has been gradually pulling itself out of negative growth. Just keep in mind that CAT is a very cyclical stock (you want to time it right!)

Source: Macrotrends.net

Cisco

Dividend Yield- 2.8%

Payout Ratio 53%

P/E = 18.9

I used to own Cisco, but not longer do. It was a swing trade for me. However, I must say Cisco is one of my favorites of the group at this price. The company has tremendous cash flow and the yield is a respectable 2.8% in this market. I do think the PE and Price to Cash Flow is a bit high for me to start buying, but I have my eye on it. Another two negatives I see are decreasing assets and decreasing cash on hand. So, it is on my list but with some reservations.

Intel

Dividend Yield = 3.11%

Payout Ratio= 28.6%

P/E = 9.6

Intel has one of the lowest payout ratios in the group. Therefore, you can expect it to have many years of raising its dividend.

Home Depot

Dividend Yield = 2.5%

Payout Ratio = 42.5%

P/E = 19.75

Home Depot’s price has recently took a turn for the worst, so it MIGHT be a good idea to keep an eye on this one. I suspect the yield will only increase.

Fedex

Dividend Yield = 1.47%

Payout Ratio = 15.73%

P/E = 10.09

I will preface by saying Fedex is my latest stock purchase. The price got too cheap and I had to pick up some shares. With a payout ratio of 15.73%, I fully suspect Fedex will keep growing its dividend for a long-time. Negatives? I don’t like the flat or decreasing margins. However, the revenues are still growing and these valuations are looking good, particularly the low Price to Cash Flow.

Lowe’s

Dividend Yield = 1.56%

Payout Ratio = 25%

P/E = 17

Lowe’s has one of the lowest payout ratios in the group; in addition, the P/E is a respectable 17. I must say I’m a bigger fan of Lowe’s than Home Depot as I believe Lowe’s has more potential to capture growth. I really like the margin growth on Lowe’s.

UPS

Dividend Yield = 3.13%

Payout Ratio = 27.8%

P/E = 13

UPS has a higher dividend than Fedex, but, with a payout ratio of only 27.8%, it has plenty of room to increase the dividend. The P/E is still a low 13, so you aren’t exactly buying at a high valuation. UPS has a lot of cash on hand and they are slowly paying down their debt. At this time, the margins don’t look as strong as Fedex.

JP Morgan

Dividend Yield = 3%

Payout Ratio = 25%

P/E = 8.66

This is a bank, so a P/E ratio is a less meaningful, please keep that in mind when you see the low number here. JPM has one of the higher dividend yields of this group with plenty of room to grow it in the future. The payout ratio is only 25%

United Health

Dividend Yield = 1.06%

Payout Ratio = 31%

P/E = 29.6

UNH has the highest P/E ratio of the group; this is because the healthcare sector has done well lately in comparison to other sectors. United Healthcare has PLENTY of room to grow the dividend; the payout ratio is only 31%. The dividend yield isn’t much, as the yield is barely above 1%. However, United Healthcare is a relatively safe pick, and the stock has performed well on a TOTAL RETURN basis.

Hopefully you’ve gotten something out of these list of Bluechip Dividend Stocks. I know there are many great bluechip companies out there that pay a dividend. These are just some of my picks given the metrics of valuation vs. payout ratio vs. yields. There’s something from each sector to help round out your stock portfolio here.

Need more Dividends? You might want to look at some REITS that I recently picked out:

https://ripeforinvesting.com/best-reits-for-income

New to Dividends and want to learn more about qualified vs. unqualified dividends? Here is my blog post detailing that:

Qualified Dividends

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