Blue-chip stocks are large companies with valuable and trusted brands. Investing in blue-chip stocks with regular dividend payouts may be a suitable addition to the portfolio as they offer optimal diversification, regular dividends and consistent growth prospects.
Against this backdrop, it might make sense to invest in fundamentally strong blue-chip dividend stocks such as Johnson & Johnson (JNJ), The Coca-Cola Company (KO) and McDonald’s Corporation (MCD) for a secure retirement portfolio.
According to the U.S. Bureau of Economic Analysis, real gross domestic product (GDP) grew at an annual rate of 2.8% in the second quarter of 2024, compared to a 1.45% increase in the first quarter. The increase in real GDP reflects increases in consumer spending, private inventory investment, and non-private fixed investment.
The increase also showed that the US economy grew faster than expected in the second quarter, with consumer spending and business investment rising. Easing inflation pressures are also increasing expectations of a rate cut in September.
When planning for your retirement, securing a stable and reliable source of income is of utmost importance. One of the most effective ways to do this is by investing in top-quality dividend stocks.
Blue-chip stocks are often leaders in their respective industries, offering not only potential capital appreciation but also a reliable source of income through regular dividends. For retirees or those nearing retirement, these stocks can offer the dual benefit of preserving wealth while generating steady cash flow, making them a cornerstone of a safe and resilient retirement portfolio.
Given these factors, let’s take a closer look at the fundamentals of the top blue-chip dividend stocks: JNJ, KO, and MCD.
Johnson & Johnson (JNJ)
JNJ researches, develops, manufactures and markets various healthcare products worldwide. The company operates in the fields of innovative medicine and MedTech. It offers products for various therapeutic areas, such as immunology, including rheumatoid arthritis, psoriatic arthritis, inflammatory bowel disease and psoriasis.
On July 30, JNJ announced that the FDA approved DARZALEX FASPRO in a quadruple regimen for newly diagnosed, transplant-eligible patients with multiple myeloma. The regimen, which combines DARZALEX FASPRO with bortezomib, lenalidomide and dexamethasone, demonstrated a 60 percent reduction in disease progression or death.
On July 22, JNJ submitted a supplemental NDA to the FDA seeking approval of SPRAVATO® CIII nasal spray as monotherapy for adults with treatment-resistant depression. Phase 4 data from SPRAVATO® monotherapy demonstrated rapid improvement in depressive symptoms at 24 hours that was sustained for at least 4 weeks.
On July 17, JNJ’s Board of Directors declared a third quarter 2024 cash dividend of $1.24 per share on its common stock. The dividend will be paid on September 10, 2024 to shareholders of record as of the close of business on August 27, 2024.
JNJ pays an annual dividend of $4.96, which equates to a yield of 3.09% at the current share price. The average dividend yield over the last four years is 2.71%. In addition, the company’s dividend payouts have grown at an average annual growth rate of 5.7% over the last five years. Johnson has increased its dividends for 61 consecutive years.
For the second quarter ended June 30, 2024, JNJ’s revenue increased 4.3% year-over-year to $22.45 billion. Gross profit increased 3.5% year-over-year to $15.58 billion. The company’s adjusted net income and adjusted earnings per share of $6.84 billion and $2.82, respectively, represent increases of 1.6% and 10.2% from the year-ago quarter.
Analysts expect JNJ’s earnings per share to increase 0.9% year-over-year to $2.31 in the fourth quarter (ending December 2024), and revenue is expected to increase 5% to $22.47 billion in the same quarter. In addition, the company beat consensus earnings per share estimates in each of the last four quarters.
JNJ shares are up 9.7% over the past month and 2.5% over the past six months, closing the last trading session at $160.62.
JNJ’s growth prospects are reflected in its POWR Ratings. The stock has an overall rating of B, which corresponds to a buy in our proprietary rating system. POWR Ratings are calculated by taking into account 118 different factors, each of which is given an optimal weighting.
The stock has a B rating for stability, value and quality. Within the medical and pharmaceutical industry, JNJ ranks 26th out of 153 stocks.
Click here to access additional JNJ ratings for sentiment, growth and momentum.
The Coca-Cola Company (KO)
KO is a beverage manufacturer that manufactures, markets and sells various non-alcoholic beverages worldwide. The company offers carbonated soft drinks, carbonated flavors, water, sports drinks, coffee and tea, and other beverages. The company markets its products under brands such as Coca-Cola, Diet Coke/Coca-Cola Light, Coca-Cola Zero Sugar, and Fanta Orange.
On July 29, JNJ announced a regular quarterly dividend of $0.48 per share, payable on October 1 to the Company’s shareholders of record as of the close of business on September 13.
KO pays an annual dividend of $1.94, which equates to a yield of 2.82% at the current share price. The average dividend yield over the last four years is 3%. In addition, the company’s dividend payouts have grown at an average annual growth rate of 4.4% over the last three years. KO has increased its dividends for 61 consecutive years.
On April 23, KO and Microsoft Corporation announced a five-year strategic partnership to align KO’s core technology strategy systemwide, enable the adoption of cutting-edge technology, and increase innovation and productivity worldwide. As part of the partnership, KO has invested $1.1 billion in the Microsoft Cloud and its generative AI capabilities.
The strategic collaboration highlights KO’s ongoing technological transformation, supported by the Microsoft Cloud as the world’s preferred and strategic cloud and AI platform. Under the program, the companies will experiment with groundbreaking new technologies such as Azure OpenAI Service to develop innovative generative AI use cases for various business functions.
For the second quarter ended June 28, 2024, KO’s net operating revenues increased 3.3% year-over-year to $12.36 billion. Gross profit increased 6.9% year-over-year to $7.55 billion. The company’s non-GAAP net income was $3.62 billion and $0.84 per share, an increase of 6.8% and 7.7%, respectively, from the year-ago quarter.
In addition, the Company’s total assets were $101.20 billion as of June 28, 2024, compared to $97.70 billion as of December 31, 2023.
According to the company’s updated annual guidance, KO expects organic revenue growth of 9% to 10%. The company’s non-GAAP EPS growth is expected to be 5% to 6%.
Analysts expect KO’s first quarter (ending March 2025) revenue and earnings per share to increase 3.1% and 5.3% year-over-year to $11.58 billion and $0.76, respectively. In addition, the company has beaten consensus revenue and earnings per share estimates in all four previous quarters.
KO shares have gained 15.3% over the past six months and 12.5% over the past year, closing the most recent trading session at $68.68.
KO’s solid fundamentals are reflected in its POWR Ratings. The stock has a B rating for stability and quality. Within the B-rated beverage industry, KO ranks 20th out of 33 stocks.
In addition to the POWR ratings above, we also have KO ratings for Momentum, Growth, Sentiment, and Value. You can find all KO ratings here.
McDonald’s Corporation (MCD)
MCD operates and franchises restaurants internationally under the McDonald’s brand. The company offers food and beverages, including hamburgers and cheeseburgers, chicken sandwiches, fries, shakes, desserts, sundaes, cookies, cakes, soft drinks, coffee and other beverages.
On July 25, MCD’s Board of Directors declared a quarterly cash dividend of $1.67 per common share, to be paid on September 17, 2024.
MCD pays an annual dividend of $6.68, which equates to a yield of 2.49% at the current share price. The average dividend yield over the last four years is 2.20%. In addition, the company’s dividend payouts have grown at an average annual growth rate of 8.4% over the last three years. MCD has increased its dividends for 22 consecutive years.
MCD’s trailing-12-month EBIT and net profit margins of 45.67% and 32.25% are 483.6% and 598.3% higher than the respective industry averages of 7.82% and 4.62%. Likewise, the stock’s trailing-12-month gross profit margin of 56.97% is significantly higher than the industry average of 37.03%.
MCD reported total revenues of $6.49 billion for the second quarter ended June 30, 2024, and its operating income was $2.92 billion for the same period. The company’s non-GAAP net income and non-GAAP EPS for the quarter were $2.15 billion and $2.97, respectively.
Street expects MCD’s fourth-quarter (ending December 2024) revenue and earnings per share to increase 3.6% year-over-year and marginally to $6.64 billion and $2.95, respectively. For fiscal 2025, the company’s revenue and earnings are expected to increase 5.2% and 7.9% year-over-year, to $27.42 billion and $12.74, respectively.
MCD shares have risen 9.1% over the past month, closing the last trading session at $267.91.
MCD’s POWR Ratings reflect its robust outlook. MCD has a grade of B for Quality and Stability. It ranks 19th among the 41 stocks in the Restaurants industry.
Click here to access additional MCD ratings for sentiment, momentum, value and growth.
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JNJ shares were trading at $159.76 per share on Monday afternoon, down $0.86 (-0.54%). Year-to-date, JNJ has gained 3.53%, while the benchmark S&P 500 index has risen 12.79% over the same period.
About the author: Rjkumari Saxena
Rajkumari began her career as a writer but gradually shifted her focus to financial journalism, leveraging her training in trading. Fascinated by the interplay of business and economic fluctuations in stocks, she aspires to develop herself as an analyst. With a talent for simplifying complex financial concepts, her mission is to provide investors with insights that lead to profitable decisions. More…
