Is your investment portfolio declining? Consider These 3 Blue-chip Dividend Stocks

The stock market has had investors in a frantic race so far this year. And while the broader indices have recovered from their year-to-date mid-June lows, there are still many individual stocks that are down sharply from their highs.

If your portfolio is down and you’re looking for well-rounded companies, you’ve come to the right place.

Honeywell International (HON -3.68%), Chevron (CLC -0.73%)and fedex (FDX -4.33%) are three blue-chip dividend stocks that can add stability to a diversified portfolio, provide a reliable passive income stream, and offer attractive growth prospects. Here’s what makes every industry-leading company a great buy now.

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Honeywell has a lot of long-term growth potential

Lee Samaha (Honeywell International): This industrial giant is a well-managed company whose growth potential will materialize in the years to come. Honeywell operates four segments: Aerospace, Honeywell Building Technologies (HBT), Performance Materials & Technologies (PMT), and Safety & Productivity Solutions (SPS).

In aerospace, Honeywell will participate in the ongoing recovery of the commercial aerospace market. Meanwhile, HBT is exposed to exciting themes in commercial buildings. First, there is the need to create healthy and clean buildings in the wake of the pandemic. Second, creating smart buildings will help owners better manage and operate them, including ensuring they meet carbon emission standards. In PMT, Honeywell is investing heavily in sustainable technology solutions (renewable fuels, carbon capture, green hydrogen) that it says will generate $700 million in revenue by 2024.

Finally, SPS has excellent long-term growth prospects in e-commerce warehouse automation and Internet of Things (IoT) technologies.

Honeywell also has a major stake in a leading quantum computing company, Quantinuum, and Honeywell Urban Aerial Mobility (UAM) and Unmanned Aerial Systems (UAS) provide systems for air taxis and delivery drones. Honeywell’s continued investment in software and digital capabilities, Honeywell Forge, underscores all of this.

That’s an impressive array of technologies, and while Honeywell’s 2% dividend yield isn’t anything out of the ordinary, the company has doubled its dividend over the past decade. Plus, it has the growth potential to do so again over the next decade.

Feeling blue about your wallet? Add that lofty blue-chip dividend stock to kick things up a notch

Scott Levine (chevron): Checking the performance of your holdings and seeing that they are significantly in the red is enough to discourage even the most experienced investor. Sophisticated investors know, however, that one of the most unproductive actions is blindly selling stocks. Instead, fortifying your portfolio with reliable blue-chip stocks — especially dividend-paying ones like Chevron and its 3.5% forward dividend yield — is a wise move to make, helping to better position your portfolio. to thrive in the long term.

For 35 consecutive years, Chevron has returned capital to shareholders through the dividend, helping it earn the lofty rank of a dividend aristocrat. Of course, this title alone does not guarantee that the company will continue to increase the dividend over the next few years, but it is certainly reassuring that management has consistently rewarded shareholders.

Another encouraging sign about the oil stock is that it is a key asset in the Berkshire Hathaway wallet. The Oracle of Omaha first bought Chevron stock in 2020, and Buffett’s position in Chevron has grown to one of Berkshire Hathaway’s largest holdings.

Operating upstream, midstream and downstream assets, Chevron is a well-diversified oil supermajor. It’s the company’s production expansion into the Permian, however, that suggests the company is well positioned to support a growing dividend. In a recent investor presentation, Chevron projected that its Permian operations would result in free cash flow of $4 billion in 2026, assuming a Brent crude oil price of $60 a barrel. Looking at where the company is headed over the next five years on a broader scale, investors will find additional reason to believe that dividend growth is in the future. With the price of Brent crude oil at $60 a barrel, Chevron estimates cash from trading per share will grow at a compound annual growth rate of more than 10% from $12.20 from 2021 to 2026.

Solid results and a growing dividend

Daniel Foelber (FedEx): FedEx, with its counterpart United Parcel Service, has outperformed the market and the industrial sector over the past three years. Much of this outperformance is due to strong results in an industry with multi-decade growth prospects.

The package delivery industry is extremely capital intensive and cyclical, making competition rare outside of FedEx, UPS, the United States Postal Service (USPS), Amazon, then some international players like DHL. A boom in e-commerce and business-to-consumer shipping helped FedEx during the height of the COVID-19 pandemic. Since then, a rebound in business-to-business volumes has boosted FedEx’s operating margin to near its pre-pandemic level of around 7%. FedEx doesn’t have as high a margin as UPS, but that doesn’t mean it’s not a stock worth holding for long-term investors.

FedEx’s competitive advantage is convenience. FedEx Express operates seven days a week and sports a fleet of 696 aircraft at the end of fiscal year 2022 (which is more than UPS’s total fleet, including leases and aircraft on order and on option).

FedEx’s core services, coupled with its niche role in expedited shipping, differentiate it from UPS and USPS. However, FedEx stock has underperformed UPS over the past few years, and for good reason, as FedEx faced bigger setbacks during the height of the US-China trade war in 2018 and struggled more to overcome supply chain challenges and labor shortages.

In general, FedEx tends to be more cyclical than UPS due to its premium services, which can make earnings more volatile. However, FedEx has done an exceptional job increasing its dividend in recent years. In fact, its dividend has increased more than sevenfold in the past 10 years, increased 130% in the past five years, and increased more than 50% in the past year. FedEx has a dividend yield above 2%, as well as a low valuation with a price/earnings ratio of 15.8.

Investors should keep in mind that FedEx is vulnerable to a global economic downturn. But for investors who believe in growing parcel deliveries, an increasingly interconnected global supply chain, and the growth of e-commerce, FedEx is a blue-chip emerging dividend stock worth considering now.

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