3 top blue-chip dividend-paying stocks to buy in 2022 and keep forever

With 2021 drawing to a close, investors have a lot to like about the S&P 500That’s over 20% gain this year. But once the eggnog has been sipped and the Christmas carols have been sung, chances are good that spirits will turn to the year ahead.

If you’re looking for strong, well-balanced companies to buy and own in 2022, you’ve come to the right place. United parcel service (NYSE: UPS), Norfolk South (NYSE: NSC) and Electric Emerson (NYSE: EMR) are three leading companies in the industry that deserve a look.

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The complete pack

Daniel Foelber (United Parcel Service): Finding a top-notch business that combines growth, value and income is a tough task. But there is a stock out there that is really the complete package. That company is UPS, which is set to post its best year on record once it releases its fourth quarter and full year results.

UPS, the company, is likely to visit you and your neighbors during the holiday season by delivering goodies to you from an open one-door van. But you might not be so familiar with UPS stock. This graph sums up what makes UPS business so powerful.

UPS Revenue Table (TTM)

UPS Revenue (TTM) data by YCharts

Over the past five years, UPS has grown revenues by over 50% while maintaining a double-digit operating margin and generating a ton of cash flow that it has used to pay and grow its dividend. UPS’s growth has really accelerated over the past two years as the pandemic has fueled the already roaring fire in e-commerce. In UPS’s case, much of the credit goes to its new CEO, Carol Tomé, who took the reins in March 2020. Since then, she has broadened the company’s routes and taken a business-centric approach. laser to operate small and medium businesses. mid-sized businesses that previously lacked the same tools as their larger competitors.

As 2022 dawns, UPS is the clear leader in parcel delivery. Its international footprint makes it one of the largest industrial companies in the world. At the top of its game in a growing industry, there is so much to love about UPS and its 2% dividend yield.

Norfolk Southern will pay dividends for many years to come

Lee Samaha (South Norfolk): If you plan to buy and hold dividend-paying stocks forever, you need to make sure that the company will be in business for a very long time and be able to pay and grow its dividend.

In this context, it makes sense to look at one of the major railroads in the United States: Norfolk Southern. Railways occupy a unique position in the market because they own their infrastructure and occupy powerful market positions within their geographic areas. For example, Pacific Union and BNSF dominate the west coast, while CSX and Norfolk Southern are key players on the east coast.

As long as there is a need to move physical product across the United States, there will be a need for railways like Norfolk Southern. In addition, all major railroads have an opportunity for profit growth through the continued adoption of precision scheduled rail management (PSR) techniques. The large-scale adoption of PSR, a set of management principles intended to handle the same volume while using fewer assets, is the main reason the railways have massively outperformed the market in recent years.

A quick glance at Norfolk Southern’s earnings in the third quarter shows the railway continually improving, with trains getting longer and heavier as manpower was reduced. All of this resulted in a significant improvement in the operating ratio (operating expenses divided by revenue, so a lower number is better) from 62.5% in the third quarter of 2020 to 60.2% in the third quarter of this year.

Management believes that it can reduce the operating ratio over time while increasing revenue, which means more profits and ultimately more dividends for investors.

Charge your passive income with this Dividend King

Scott Levine (Emerson Electric): You don’t have to be the most experienced investor in the business to know that there are no guarantees when you invest in stocks. Even the most sapphire blue chips represent minimal risk, especially when it comes to dividend payers. What appears to be a solid payout today could eventually collapse. That being said, for those investors looking for the best chance of gaining a solid value that will continue to generate a steady stream of passive income in their portfolios, I think Emerson Electric, with a forward dividend yield of 2.3 %, is a stock that should fuel their excitement.

For 65 consecutive years, Emerson Electric not only paid a dividend, it was increases the payout as well, contributing to his distinction as a Dividend King. Providing automation solutions to a wide range of industries including automotive, power generation and medical, Emerson Electric also helps meet the heating and cooling needs of residential and commercial customers. Along with its ability to mitigate the risk of a downturn in any of the individual markets it serves, I find the company’s focus on growth industries particularly appealing. Last week, for example, Emerson Electric announced the acquisition of Mita-Teknik, a provider of automation solutions for the wind industry, which will soon be one of the cheapest forms of electricity and, as a result, , the most attractive for electricity producers.

Of course, there is no guarantee that Emerson Electric will avoid short circuits in the years to come, but management’s cautious approach to the dividend suggests that this company is well positioned to retain its royal title for the foreseeable future. Over the past 10 years, Emerson Electric has averaged a conservative payout ratio of 59.8%. In addition, the company generates strong cash flow, positioning itself to pursue further acquisitions without compromising its financial health. In 2021, for example, Emerson Electric reported $ 3 billion in free cash flow, which represents about 16.4% of its revenue, a performance higher than the 13.1% and 15.2% it he reported in 2019 and 2020, respectively. Obviously, this is a cherished dividend that prospective investors can be overfed with.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are motley! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.

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