Size matters when it comes to dividend stability.
For many dividend investors, the wisest path to long-term income is to focus on investing in companies with stability. One of the simplest ways to ensure you’re investing in stable companies is to pick large-cap stocks that dominate their markets. Even if there isn’t much growth left in these mature companies, large-cap stocks with market capitalizations of more than $100 billion often bring plenty of other benefits, including entrenched brands and deep pockets that will keep business humming in any market. These factors allow large-cap stocks to continue paying out dividends to their shareholders, something that many companies have struggled with or simply stopped during the pandemic. Here are nine large-cap dividend stocks to buy that offer generous — and more importantly, sustainable — dividends.
Pfizer (ticker: PFE)
Pfizer is in many ways the poster child for large stocks with scale, stable income and staying power. The company traces its roots to the mid-1800s, and has grown into a global pharmaceutical powerhouse that, during fiscal 2019, booked $51.8 billion in annual revenue. Its products are essential to the lives of millions around the world, and the vaccine candidate Pfizer has created alongside BioNTech (BNTX) is a leading contender in the race for a cure to the pandemic. Perhaps most importantly, PFE has paid uninterrupted dividends since 1980, and its dividend payout has increased annually since 2009. Pfizer continues to grow by acquiring smaller competitors, like its purchase of Array BioPharma last year. These deals and PFE’s massive portfolio of proven drugs ensure the company will remain at the center of the pharmaceutical industry for many years to come.
Market capitalization: $200 billion
Current yield: 4.2%
Coca-Cola Co. (KO)
If there’s any company with an entrenched brand it’s Coke, thanks to an iconic product line and decades of highly successful marketing to ensure its logo is recognized around the world. Over the last few years, as customers have grown more health-conscious and moved away from sugary sodas, growth has been hard to come by — a trend only exacerbated by the pandemic, which has kept consumers at home and away from soda fountains, vending machines and other sales channels Coke relies on. Then again, with a value among the top 30 largest publicly traded U.S. stocks and boasting one of the strongest brands on the globe, Coke doesn’t need great growth prospects in order to be a reliable investment and one of the best large-cap dividend stocks to buy now.
Market cap: $212 billion
Current yield: 3.3%
Unilever (UL)
Founded in the 1890s, Unilever now estimates that on any given day a staggering 2.5 billion people will use its products. From Dove soap to Breyer’s ice cream to Lipton teas, Unilever has a proud place in kitchen cupboards around the world. And as most investors know, consumer staples companies are some of the more reliable stocks in the market, generating consistent revenue in any economic environment. Unilever’s size has allowed the company to absorb losses in some categories during the pandemic, like its foods and refreshments segment, in which sales declined 1.7% in the second quarter, while capitalizing on opportunities in others, such as its home care segment, in which sales jumped 3.2%. Broad scope, wide appeal and products that people need during the pandemic will keep Unilever profitable and shareholders happy.
Market cap: $160 billion
Current yield: 3.7%
BHP Group (BHP)
BHP may not be the kind of brand that consumers recognize, but as one of the largest mining conglomerates in the world, there are few businesses that this Australia-based company doesn’t touch. BHP’s portfolio includes oil and natural gas, which has suffered as the energy industry took a historic tumble earlier this year, but mining of copper, iron ore, coal and more has sustained the company’s overall business. It’s difficult to imagine any manufacturer or industrial company that won’t need these raw materials in some form or fashion, and with operations in Australia, Africa, North America and South America, this diversified miner has the scale and connections to weather any market volatility.
Market cap: $130 billion
Current yield: 4.2%
Philip Morris International (PM)
Cigarette manufacturing isn’t exactly a growth industry now that everyone understands the health risks of tobacco, but Philip Morris remains a global powerhouse with some of the leading cigarette brands in the world — including Marlboro, Parliament and Chesterfield. The company has also invested heavily in developing markets in Asia and Africa, where smoking is more common. And its investments in vaping products continue to pay dividends — while cigarette shipments declined 17.6% in the second quarter, heated tobacco shipments grew 24.3%. Despite very public opposition in the U.S. and Europe through ads and public smoking bans, PM remains a company that books just shy of $30 billion in annual net revenue and offers investors a generous dividend each quarter.
Market cap: $120 billion
Current yield: 6.2%
IBM Corp. (IBM)
While IBM may not belong to a group of high-flying companies like the “FAANG” stocks, it is still one of the top large-cap dividend stocks to buy and an entrenched, old-school tech titan. The company isn’t as dynamic as others, but IBM continues to be a big player in tech with enterprise software and cloud computing. The company’s global business services revenue declined 7% in the second quarter, which was understandable given all of the offices that have been shuttered during the pandemic — but IBM’s cloud and cognitive software segment buoyed the company with revenue increasing by 3% during the quarter. A strong cloud business, coupled with $14.3 billion in cash on hand to cover costs and provide dividends to shareholders, indicates that “Big Blue” isn’t going anywhere anytime soon.
Market cap: $107 billion
Current yield: 5.4%
United Parcel Service (UPS)
In the age of e-commerce, when the typical American can get almost everything delivered to their door, UPS is a crucial bridge between businesses and customers. With $74 billion in annual revenue during 2019 and operations in more than 220 countries, UPS is a vital logistics partner in many areas of the world. This all adds up to a stable company that is almost a kind of utility for businesses, and since the pandemic began, it has become more essential than ever. In the second quarter, UPS enjoyed a record 21% increase in average daily shipping volume, as the company shipped 21.1 million packages every day. With no end to the pandemic in sight, it seems extremely likely that UPS will continue to enjoy a surge in business for the foreseeable future.
Market cap: $140 billion
Current yield: 2.5%
Verizon Communications (VZ)
Lockdowns around the world have kept people indoors, but that doesn’t mean they’ve remained out of touch with one another. Verizon, the largest cellular network provider in the world by subscribers, has kept people connected during the pandemic. While this has kept subscriber turnover low, it hasn’t translated to higher profits during the second quarter. The company reported a 4% decline in revenue in its consumer segment and a 3.7% decline in revenue in its business segment, both of which led to a 4.1% year-over-year decline in earnings per share. Despite these results, Verizon and its shareholders have plenty to be positive about — for instance, the rollout of its 5G network has begun slowly but surely, and it’s now available in 60 markets. An excellent dividend yield will keep investors happy while 5G becomes more widely available.
Market cap: $245 billion
Current yield: 4.2%
Johnson & Johnson (JNJ)
In a market as unpredictable as this one, a company with a diverse array of businesses can provide investors with a safe haven. Johnson & Johnson is not only one of the largest consumer goods companies in the world, it’s also a titan of the pharmaceutical industry — both of which are excellent industries to be in right now. This diversification was essential during the second quarter, when Johnson & Johnson reported a 33.9% decline in medical device sales, as people stayed away from doctor’s offices due to the pandemic. Yet pharmaceutical sales increased 2.1%, helping to offset losses. The company still reported a tough quarter, yet it’s confident that things will turn around as people begin to feel safer leaving their homes — and the fact that JNJ has a leading vaccine contender is a plus that investors shouldn’t dismiss.
Market cap: $384 billion
Current yield: 2.8%
Nine large-cap dividend stocks to buy:
— Pfizer (PFE)
— Coca-Cola Co. (KO)
— Unilever (UL)
— BHP Group (BHP)
— Philip Morris International (PM)
— IBM Corp. (IBM)
— United Parcel Service (UPS)
— Verizon Communications (VZ)
— Johnson & Johnson (JNJ)
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9 Large-Cap Dividend Stocks to Own Now originally appeared on usnews.com
Update 09/23/20: This story was first published on a previous date and has been updated with new information.
