These 5 Blue-Chip Stocks Pay the Best Dividends
List of Blue-Chip Stocks That Yield Up to 8.7%
In an economic environment with decades-high inflation, some income investors just look at dividend yield: the higher, the better. But at a time when the broader stock market has been tumbling, some investors specifically look for big companies that provide reliable, high-yield dividends.
These are blue-chip stocks, industry giants that have long histories of market-thumping total returns. Because the companies are huge and have strong market penetration and rock-solid balance sheets, they tend to weather economic headwinds better than smaller companies. Not always, of course; some macroeconomic challenges affect certain sectors more than others. That said, blue-chip stocks generally rebound more quickly than other types of stocks.
That’s what each of the following five blue-chip stocks have in common. They’re great options for investors who seek a balance of steady returns and lower risk.
|Company Name||Stock Ticker||Sector||Yield|
|Kraft Heinz Co||NASDAQ:KHC||Consumer Defensive||4.1%|
|Enterprise Products Partners LP||NYSE:EPD||Midstream Oil & Gas||7.6%|
|Magellan Midstream Partners LP||NYSE:MMP||Midstream Oil & Gas||8.0%|
|Altria Group Inc||NYSE:MO||Consumer Defensive||8.3%|
|Omega Healthcare Investors Inc||NYSE:OHI||Real Estate||8.7%|
There are some no-brainers when it comes to high-yield blue-chip stocks. Kraft Heinz Co (NASDAQ:KHC) is one of them. It might be the perfect income and growth stock.
Kraft Heinz was formed when Kraft merged with Heinz in 2015. The third-largest food and beverage manufacturer in North America, it reported about $26.0 billion in sales for 2021. (Source: “About The Kraft Heinz Company,” Kraft Heinz Co, last accessed November 29, 2022.)
The company manufactures and markets grocery products—including condiments, sauces, dairy products, packaged meals, meats, soft drinks, and coffee—throughout the world. (Source: “Company Factsheet,” Kraft Heinz Co, last accessed November 29, 2022.)
In addition to its eponymous brand, the company owns well-known brands like “Jell-O,” “Kool-Aid,” “Lunchables,” “Maxwell House,” “Oscar Mayer,” and “Velveeta.” (Source: “Brands,” Kraft Heinz Co, last accessed November 29, 2022.)
A global footprint and loyal customers are two big reasons why Warren Buffett’s Berkshire Hathaway Inc (NYSE:BRK.B) is the biggest holder of Kraft Heinz stock, with 325,634,818 shares, or 26.6%, of the company. (Source: “Form 13F Information Table,” Securities and Exchange Commission, last accessed November 29, 2022.)
KHC stock currently pays a quarterly dividend of $0.40 per share, for a current yield of 4.1%. That means Berkshire Hathaway will pocket $521.2 million in dividends this year alone.
Kraft Heinz stock has also been providing investors with impressive capital gains. As of this writing, KHC stock is up by 13% year-to-date and 15% year-over-year.
Enterprise Products Partners
An oil and natural gas stock that has a history of significant capital appreciation and rising, ultra-high-yield dividends is Enterprise Products Partners LP (NYSE:EPD).
The company is a leading North American provider of midstream energy services to producers and consumers of natural gas, natural gas liquid (NGL), crude oil, refined products, and petrochemicals.
Since going public in July 1998, the Houston, TX-based company has seen its asset base grow from $715.0 million to $68.0 billion (as of December 31, 2021). The company’s exceptional asset growth is a result of organic growth and acquisitions. (Source: “Investor Deck: November 2022,” Enterprise Products Partners LP, last accessed November 29, 2022.)
The partnership’s combined operations include:
- More than 50,000 miles of natural gas, NGL, crude oil, refined product, and petrochemical pipelines
- More than 260 million barrels of NGL, refined product, and crude oil storage capacity
- 14 billion cubic feet of natural gas storage capacity
- 24 natural gas processing plants, 18 fractionators, 11 condensate distillation facilities, and seven splitters
Thanks to high cash generation, Enterprise Products Partners LP has been providing one of the safest high-yield dividends in the oil and gas industry.
In the first quarter of 2022, Enterprise Products stock paid a quarterly dividend of $0.465 per unit. This was the company’s 24th straight year of increasing its dividend. It didn’t stop there, though. In July, the company raised EPD stock’s quarterly dividend again, this time to $0.475 per unit. That increase was the partnership’s 74th distribution increase since its initial public offering (IPO) in 1998. (Source: “Total Distributions,” Enterprise Products Partners LP, last accessed November 29, 2022.)
Thanks to the high demand for oil, the company continues to report wonderful financial results, which investors have rewarded with market-crushing share-price gains. As of this writing, Enterprise Products stock is up by five percent year-to-date and 20% year-over-year.
Magellan Midstream Partners
Magellan Midstream Partners LP (NYSE:MMP) is a Tulsa, OK-based midstream oil and gas company that primarily transports, stores, and distributes refined petroleum products and crude oil. (Source: “Who is Magellan Midstream Partners?” Magellan Midstream Partners LP, last accessed November 29, 2022.)
The company’s oil and gas infrastructure consists of a 9,800-mile refined products pipeline system with 54 connected terminals and two marine storage terminals. It also owns approximately 2,200 miles of crude oil pipelines, a condensate splitter, and storage facilities with an aggregate storage capacity of about 39 million barrels.
Magellan Midstream Partners LP wholly owns the condensate splitter, approximately 1,000 miles of the pipelines, and 31 million barrels worth of storage capacity. The remainder of the assets are owned through joint ventures.
Even though commodity prices often go on roller-coaster rides, Magellan Midstream Partners stock has delivered substantial distribution growth over the years. From 2010 to 2019, the partnership was hiking its payout every single quarter.
Then the COVID-19 pandemic hit, sending shock waves across the energy world. Magellan Midstream kept dividend hogs happy, though, maintaining MMP stock’s frothy quarterly distribution at $1.0275 per unit. (Source: “Cash Distributions,” Magellan Midstream Partners LP, last accessed November 29, 2022.)
The company has raised its distribution twice since the start of 2021. It currently pays a quarterly dividend of $1.0475 per share, for a yield of eight percent. Even with its dividend-hike pause in 2020, Magellan Midstream Partners LP has raised its dividend annually for 22 consecutive years. Since its inception in 2001, the company’s quarterly distribution has increased by 698%.
Furthermore, Magellan Midstream Partners stock price has been on a tear, up by 21% since the start of 2022 and 18% over the last 12 months.
Altria Group Inc (NYSE:MO) is a sin stock for the ages. The biggest tobacco company in the U.S., Altria makes boatloads of money and returns value to its shareholders via growing, ultra-high-yield dividends and a multibillion-dollar share repurchase program.
At one point, Altria was mostly known as a cigarette behemoth that owns the “Marlboro” brand. Over the years, the company has diversified to also sell smoke-free tobacco products, cannabis, and alcohol. (Source: “Corporate Fact Sheet,” Altria Group Inc, last accessed November 29, 2022.)
The company’s combustible tobacco brands include the aforementioned Marlboro, “Black & Mild,” and “Parliament.” Its smoke-free tobacco brands include “Copenhagen” (moist smokeless tobacco), “on!” (oral nicotine pouches), and “IQOS” (global heat-not-burn leader).
Altria Group Inc owns a 10% equity investment in the world’s largest brewer, Anheuser-Busch InBev (NYSE:BUD), and a billion-dollar stake in marijuana company Cronos Group Inc (NASDAQ:CRON).
For income investors, it’s tough to find a better stock than MO stock.
The company has raised its dividend for the last 53 years. In August, management increased Altria stock’s regular quarterly dividend by 4.4% to $0.94 per share, representing a yield of 8.3%. This marks MO stock’s 57th dividend increase over the past 53 years. Altria’s target payout ratio is about 80 percent of the company’s adjusted earnings per share. (Source: “Dividend Schedule & History,” Altria Group Inc, last accessed November 29, 2022.)
Altria stock’s share price has been outperforming the stock market, up by 0.10% year-to-date and 9.8% year-over-year.
Omega Healthcare Investors
Omega Healthcare Investors Inc (NYSE:OHI) is a triple-net, equity real estate investment trust (REIT) with a portfolio of senior care centers, skilled nursing facilities, and assisted living facilities. The company owns 921 properties in 43 U.S. states and in the U.K., and has partnered with 63 medical operators. (Source: “Map of Our Locations,” Omega Healthcare Investors Inc, last accessed November 29, 2022.)
The health-care industry, especially nursing homes and care facilities, took a hit during COVID-19. Omega Healthcare Investors was no exception. The company has mostly recovered from the downturn, but a few of its tenants are still in arrears. Omega Healthcare Investors Inc has amended some contracts to ensure it will eventually receive all of its rent and interest payments.
That doesn’t mean the company isn’t making a ton of cash. Its third-quarter net income was $105.0 million, or $0.43 per share. Its funds from operations (FFO) in the third quarter were $159.0 million, or $0.65 per share, while its adjusted FFO were $185.0 million, or $0.76 per share. The company’s funds available for distribution slipped to $173.0 million in the third quarter, from $199.0 million in the same period of 2021. (Source: “Omega Reports Third Quarter 2022 Results and Recent Developments,” Omega Healthcare Investors Inc, November 2, 2022.)
The company’s steady income stream is why it’s able to provide OHI stockholders with reliable, growing, high-yield dividends. Omega Healthcare Investors Inc currently pays a quarterly dividend of $0.67 per share, for a yield of 8.7%.
Moreover, as a solid blue-chip stock, Omega Healthcare stock continues to reward buy-and-hold investors with share-price appreciation. OHI stock is up by 13% year-to-date and 14.8% year-over-year.