Since 1926, dividends have contributed approximately 32% of the total return for the S&P 500, while capital appreciations have contributed 68%. Therefore, sustainable dividend income and capital appreciation potential are essential for total return expectations.
A recent study from the Hartford Funds, in collaboration with Ned Davis Research, revealed that dividend stocks have consistently outperformed non-payers. Over the past half-century (1973-2022), dividend stocks delivered an annualized return of 9.18%, more than double the annualized return for non-payers (3.95%). This data instills confidence in the potential of dividend stocks.
Most dividend investors seek solid passive income streams of quality dividend stocks. Passive income is a steady stream of unearned income that doesn’t require active traditional work. Shared ideas for earning passive income include investments, real estate, or side hustles.
We screened our 24/7 Wall St. blue chip dividend research database, looking for large and mega-cap stocks that investors can buy and hold for years that provide steady, dependable passive income streams. Six companies that dominate their sectors, two of which are European giants, came up, and all make sense for investors now.
British American Tobacco
Source: Getty Images/Justin Sullivan
This European giant continues to print money and pays a massive 9.57% dividend.
British American Tobacco PLC (NYSE: BTI) offers:
- Vapor
- Tobacco heating
- Modern oral nicotine products
- Combustible cigarettes
- Traditional oral products, such as snus and moist snuff
The company offers its products under:
- Vuse
- Glo
- Velo
- Grizzly
- Kodiak
- Dunhill
- Kent
- Lucky Strike
- Pall Mall
- Rothmans
- Camel
- Natural American Spirit
- Newport
- Vogue
- Viceroy
- Kool
- Peter Stuyvesant
- Craven A
- State Express 555
- Shuang Xi brands
BP
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This company is a premier European integrated oil giant, paying shareholders a hefty 4.72 % dividend. BP PLC (NYSE: BP) engages in the energy business worldwide. It operates through Gas & Low Carbon Energy, Oil Production & Operations, Customers & Products, and Rosneft segments.
BP produces and trades natural gas, offers biofuels, operates onshore and offshore wind and solar power generating facilities, and provides de-carbonization solutions and services, such as hydrogen and carbon capture, usage, and storage.
The company is also involved in the convenience and mobility business, which manages the sale of fuels to:
- Wholesale and retail customers
- Convenience products
- Aviation fuels
- Castrol lubricants
- Refining,
- Supply and trading of oil products
- Operation of electric vehicle charging facilities
In addition, it produces and refines oil and gas and invests in upstream, downstream, and alternative energy companies, advanced mobility, bio and low-carbon products, carbon management, digital transformation, and power and storage areas.
Bristol-Myers Squibb
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This top company remains a solid pharmaceutical stock to own long-term, offering an outstanding entry point and a massive 4.68% dividend. Bristol-Myers Squibb Co. (NYSE: BMY) discovers, develops, licenses, manufactures, and markets pharmaceutical products worldwide.
The company offers products in hematology, oncology, cardiovascular, and immunology therapeutic classes.
The company’s products include:
- Revlimid, an oral immunomodulatory drug for the treatment of multiple myeloma
- Opdivo for anti-cancer indications
- Eliquis, an oral inhibitor indicated for the reduction in risk of stroke/systemic embolism in NVAF and for the treatment of DVT/PE
- Orencia for adult patients with active RA and psoriatic arthritis, as well as reducing signs and symptoms in pediatric patients with active polyarticular juvenile idiopathic arthritis
The company also provides:
- Sprycel for the treatment of Philadelphia chromosome-positive chronic myeloid leukemia
- Yervoy for the treatment of patients with unresectable or metastatic melanoma
- Abraxane, a protein-bound chemotherapy product
- Implicit for the treatment of multiple myeloma
- Reblozyl for the treatment of anemia in adult patients with beta-thalassemia
Chevron
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This integrated giant is a safer way for investors looking to get positioned in the energy sector and has a sweet 4.10% dividend. Chevron Corp. (NYSE: CVX) engages in integrated energy and chemicals operations worldwide through its subsidiaries.
The company operates in two segments:
- Upstream
- Downstream
The Upstream segment is involved in the following:
- Exploration, development, production, and transportation of crude oil and natural gas
- Processing, liquefaction, transportation, and regasification associated with liquefied natural gas
- Transportation of crude oil through pipelines; and transportation, storage
- Marketing of natural gas, as well as operating a gas-to-liquids plant
The Downstream segment engages in:
- Refining crude oil into petroleum products
- Marketing crude oil, refined products, and lubricants
- Manufacturing and marketing renewable fuels
- Transporting crude oil and refined products by pipeline, marine vessel, motor equipment, and rail car
- Manufacturing and marketing of commodity petrochemicals, plastics for industrial uses, and fuel and lubricant additives
It also involves cash management, debt financing, insurance operations, real estate, and technology businesses.
Chevron announced last fall that it has entered into a definitive agreement with Hess Corp. (NYSE: HES) to acquire all of the outstanding shares of Hess in an all-stock transaction valued at $53 billion, or $171 per share based on Chevron’s closing price on October 20, 2023. Under the terms of the agreement, Hess shareholders will receive 1.0250 shares of Chevron for each Hess share. The transaction’s total enterprise value, including debt, is $60 billion.
United Parcel Service
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With the explosion of internet commerce, this company has enormous growth potential and offers a hefty 4.33% dividend. United Parcel Service Inc. (NYSE: UPS) is a package delivery company that provides transportation and delivery, distribution, contract logistics, ocean freight, air freight, customs brokerage, and insurance services.
It operates through two segments:
- U.S. Domestic Package
- International Package
The U.S. Domestic Package segment offers time-definite delivery of letters, documents, small packages, and palletized freight through air and ground services in the United States.
The International Package segment provides guaranteed-day and time-definite international shipping services, comprising guaranteed-time-definite express options in:
- Europe
- Asia
- the Indian subcontinent
- the Middle East
- Africa
- Canada
- Latin America
UPS is not just a package delivery company. It also provides diverse services, including international air and ocean freight forwarding, post-sales, and mail and consulting services.
Furthermore, it offers truckload brokerage services, supply chain solutions to the healthcare and life sciences industries, financial and information services, and fulfillment and transportation management services. This broad portfolio of services ensures the company’s stability and potential for growth, making it an attractive investment option.
Verizon Communications
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People need to communicate through good times and bad, and this telecom giant pays a massive 6.51% dividend. Verizon Communications Inc. (NYSE: VZ) provides communications, technology, information, and entertainment products and services to consumers, businesses, and governmental entities worldwide.
It operates in two segments:
- Verizon Consumer Group
- Verizon Business Group
The Consumer segment provides wireless services across the wireless networks in the United States under the Verizon and TracFone brands and through wholesale and other arrangements. It also provides fixed wireless access (FWA) broadband through its wireless networks and related equipment and devices, such as smartphones, tablets, smartwatches, and other wireless-enabled connected devices.
The segment also offers wireline services in Mid-Atlantic, Northeastern United States, and Washington, D.C., through its fiber-optic network, Verizon Fios product portfolio, and a copper-based network.
The Business segment provides wireless and wireline communications services and products, including:
- FWA broadband
- Data, video and conferencing
- Corporate networking, security, and managed network
- Local and long-distance voice
- Network access services to deliver various IoT services and products to businesses, government customers, and wireless and wireline carriers in the United States and internationally
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