3 Blue-Chip Dividend Stocks for a Secure Retirement Portfolio

Blue-chip stocks are large companies with valuable and trusted brands. Investing in blue-chip stocks having regular dividend payouts are potentially a suitable addition to the portfolio, providing optimum diversification, regular dividends, and consistent growth prospects.

Given this backdrop, it could be wise to invest in fundamentally strong blue-chip dividend stocks 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 as compared to the increase of 1.45% during the first quarter. The increase in real GDP reflect increases in consumer spending, private inventory investment, and non-residential fixed investment.

The increase also showed faster growth than expected in the second quarter of the U.S. economy with rise in consumer spending and business investment. Also, easing inflation pressures are keeping the expectations of a September interest rate cut.

When planning for retirement, securing a stable and reliable source of income becomes paramount. One of the most effective ways to achieve this is by investing in blue-chip dividend stocks.

Blue-chip stocks are often leaders in their respective industries, offering not only potential capital appreciation but also a dependable stream of income through regular dividends. For retirees or those approaching retirement, these stocks can provide the dual benefit of preserving wealth while generating a steady cash flow, making them a cornerstone of a secure and resilient retirement portfolio.

Given these factors, let’s delve deeper into the fundamentals of top blue-chip dividend stocks: JNJ, KO, and MCD.

Johnson & Johnson (JNJ)

JNJ researches, develops, manufactures, and sells various products in the healthcare field worldwide. The company operates through Innovative Medicine; and MedTech segments. It offers products for various therapeutic areas, like immunology, including rheumatoid arthritis, psoriatic arthritis, inflammatory bowel disease, and psoriasis.

On July 30, JNJ announced that the FDA approved DARZALEX FASPRO in a quadruplet regimen for newly diagnosed, transplant-eligible multiple myeloma patients. The regimen, combining DARZALEX FASPRO with bortezomib, lenalidomide, and dexamethasone, showed a 60% 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 a monotherapy for adults living with treatment-resistant depression. Phase 4 SPRAVATO® monotherapy data showed quick improvement in depressive symptoms at 24 hours, and sustained through at least 4 weeks.

On July 17, JNJ’s Board of Directors declared a cash dividend for the third quarter 2024 of $1.24 per share on its common stock. The dividend is payable on September 10, 2024 to shareholders of record at the close of business on August 27, 2024.

JNJ pays an annual dividend of $4.96, which translates to a yield of 3.09% at the current share price. Its four-year average dividend yield is 2.71%. Moreover, the company’s dividend payouts have increased at a CAGR of 5.7% over the past five years. Johnson has raised its dividends for 61 consecutive years.

For the second quarter that ended June 30, 2024, JNJ’s reported sales increased 4.3% year-over-year to $22.45 billion. Its gross profit rose 3.5% year-over-year to $15.58 billion. The company’s adjusted net earnings and adjusted EPS of $6.84 billion and $2.82, indicates increases of 1.6% and 10.2% from the prior year’s quarter, respectively.

Analysts expect JNJ’s EPS for the fourth quarter (ending December 2024) to increase 0.9% year-over-year to $2.31 and its revenue is estimated to increase 5% year-over-year to $22.47 billion for the same quarter. Moreover, the company surpassed the consensus EPS estimates in each of the trailing four quarters.

JNJ’s stock has soared 9.7% over the past month and 2.5% over the past six months to close 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 translates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.

The stock has a B grade for Stability, Value, and Quality. Within the Medical - Pharmaceuticals industry, JNJ is ranked #26 out of 153 stocks.

Click here to access additional ratings of JNJ for Sentiment, Growth, and Momentum.

The Coca-Cola Company (KO)

KO is a beverage company which manufactures, markets, and sells various nonalcoholic beverages globally. The company offers sparkling soft drinks, sparkling flavors; water, sports, coffee, and tea, and other beverages. The company markets its products under brands like Coca-Cola, Diet Coke/Coca-Cola Light, Coca-Cola Zero Sugar, and Fanta Orange.

On July 29, JNJ declared a regular quarterly dividend of $0.48 per share, payable on October 1 to shareholders of record of the company as of the close of business September 13.

KO pays an annual dividend of $1.94, which translates to a yield of 2.82% at the current share price. Its four-year average dividend yield is 3%. Moreover, the company’s dividend payouts have increased at a CAGR of 4.4% over the past three years. KO has raised 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, enabling the adoption of leading-edge technology, and enhance innovation and productivity globally. For the partnership, KO has made a $1.1 billion commitment to the Microsoft Cloud and its generative AI capabilities.

The strategic collaboration emphasizes on KO’s ongoing technology transformation, supported by the Microsoft Cloud as its globally preferred and strategic cloud and AI platform. Under the program, the companies will experiment with groundbreaking new technology like Azure OpenAI Service to develop innovative generative AI use cases across various business functions.

For the second quarter that ended June 28, 2024, KO’s net operating revenues increased 3.3% year-over-year to $12.36 billion. Its gross profit grew 6.9% from the year-ago value to $7.55 billion. The company’s non-GAAP net income came in at $3.62 billion and $0.84 per share, up 6.8% and 7.7% from the prior year’s quarter, respectively.

In addition, the company’s total assets stood at $101.20 billion as of June 28, 2024, compared to $97.70 billion as of December 31, 2023.

According to the company’s updated full-year guidance, KO expects organic revenue growth of 9% to 10%. The company’s non-GAAP EPS growth is expected to be 5% - 6%.

Analysts expect KO’s revenue and EPS for the first quarter (ending March 2025) to increase 3.1% and 5.3% year-over-year to $11.58 billion and $0.76, respectively. Moreover, the company has topped the consensus revenue and EPS estimates in all four trailing quarters.

KO’s shares have gained 15.3% over the past six months and 12.5% over the past year to close the last trading session at $68.68.

KO’s sound fundamentals are reflected in its POWR Ratings. The stock has a B grade for Stability and Quality. Within the B-rated Beverages industry, KO is ranked #20 among 33 stocks.

In addition to the POWR Ratings we’ve stated above, we also have KO ratings for Momentum, Growth, Sentiment, and Value. Get all KO ratings here.

McDonald’s Corporation (MCD)

MCD operates and franchises restaurants under the McDonald’s brand internationally. The company offers food and beverages, including hamburgers and cheeseburgers, chicken sandwiches, fries, shakes, desserts, sundaes, cookies, pies, soft drinks, coffee, and other beverages.

On July 25, MCD’s Board of Directors declared a quarterly cash dividend of $1.67 per share of common stock to be paid on September 17, 2024.

MCD pays an annual dividend of $6.68, which translates to a yield of 2.49% at the current share price. Its four-year average dividend yield is 2.20%. Moreover, the company’s dividend payouts have increased at a CAGR of 8.4% over the past three years. MCD has raised its dividends for 22 consecutive years.

MCD’s trailing-12-month EBIT and net income 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 considerably higher than the industry average of 37.03%.

MCD reported total revenues of $6.49 billion for the second quarter that 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 came in at $2.15 billion and $2.97, for the quarter, respectively.

Street expects MCD’s revenue and EPS for the fourth quarter (ending December 2024) to increase 3.6% and marginally year-over-year to $6.64 billion and $2.95, respectively. For the fiscal year 2025, the company’s revenue and EPS are expected to grow 5.2% and 7.9% year-over-year to $27.42 billion and $12.74.

Shares of MCD have surged 9.1% over the past month to close the last trading session at $267.91.

MCD’s POWR Ratings reflect its robust outlook. MCD has a B grade for Quality and Stability. It is ranked #19 among the 41 stocks in the Restaurants industry.

Click here to access additional MCD ratings for Sentiment, Momentum, Value, and Growth.

What To Do Next?

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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%, versus a 12.79% rise in the benchmark S&P 500 index during the same period.

Rajkumari started her career as a writer but gradually shifted her focus to financial journalism, leveraging her educational background in Commerce. Fascinated by the interplay of business and economic shifts in equities, she aspires to evolve as an analyst. With a knack for simplifying complex financial concepts, her mission is to empower investors with insights that lead to profitable decisions.

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