September often prompts investors to reevaluate their portfolios, as the post-summer calm gives way to heightened volatility. This year, many are gravitating toward dividend stocks, which have historically outperformed during rate cut environments. A notable aspect of this trend is the appeal of blue-chip stocks, as they not only provide stability but also offer a dependable dividend yield, currently exceeding 5%.
With long-term Treasuries yielding slightly below 5%, many investors remain hesitant to enter the equity market for the potential of higher returns, given the perceived risk of equities. However, as interest rates potentially decrease, it’s expected that capital will shift toward dividend stocks.
Among the blue-chip dividend stocks to consider are:
Verizon Communications (VZ)
Verizon is transitioning from being viewed as a debt-laden telecom company to a significant player in the AI sector. Having seen its stock drop over 40% from a peak in late 2020 to a trough in 2023, the company has faced challenges largely tied to interest expenses and rising rates. Despite this, Verizon remains profitable and has consistently increased its dividend payouts, currently yielding 6.13% with a 58% payout ratio. The company’s focus on leveraging AI to enhance customer service is a key strategy moving forward, with its infrastructure already serving major tech firms like Google and Meta.
Enterprise Products Partners (EPD)
As a leading midstream energy company, Enterprise Products Partners boasts a resilient business model that thrives on transporting natural gas. Its revenue remains stable, unaffected by market price swings due to long-term fee-based contracts. This company benefits from the booming demand for U.S. natural gas, especially from European markets looking for stable energy sources amid geopolitical tensions. With a robust 6.93% dividend yield and 28 consecutive years of dividend increases, EPD also exhibits an impressive growth trajectory, having appreciated by 82.3% over the past five years.
Bristol-Myers Squibb (BMY)
Bristol-Myers Squibb operates within the biopharmaceutical sector, addressing critical health issues such as cancer and HIV/AIDS. Although the stock has faced a decline of nearly 22% over the past five years, primarily due to a significant debt load and its associated costs, the company’s diversified drug pipeline presents a solid long-term investment opportunity. The anticipated growth in earnings per share (EPS) is substantial, with projections indicating a potential 62% annual increase in the coming years. Currently, BMY offers a dividend yield of 5.24% with a modest payout ratio of 37%.
In light of these investment options, the allure of dividend stocks becomes clear as they present both yield and stability. For those feeling uncertain about retirement or their financial health, utilizing tools that connect individuals with experienced financial advisors can provide clarity and guidance for future planning.
