Blue-chip stocks to buy for income are somewhat on the back burner at the moment. The Fed is set to loosen interest rates in 2024. The cost of lending is thus set to decrease creating a powerful set of factors for growth shares. In turn, blue-chip shares, more noted for stability than growth, arguably have become less attractive.
Yet, blue-chip stocks rarely go out of style. It is never a bad idea to play defensively. If the economy continues to rebound, then an investment will continue to grow, albeit somewhat slower than one in growth oriented firms. If the economy slips up, then blue-chip stocks will really shine. Either way, investors are unlikely to regret investing.
I’m going to continue to sing the praises of Altria (NYSE:MO) stock into 2024. As blue-chip stocks to buy for income go, buying shares of Altria is very easy to justify. There are many metrics which point to the idea that MO shares are simply a great investment for those looking for income. Yes, Altria is and was a tobacco firm that has to pivot with the evolution of the industry. Growth isn’t as high as it once was but the industry is not dying.
Let’s start with the dividend because that’s going to be the main reason to invest in Altria. As I write this, MO shares are yielding 9.75%. Altria’s dividend payout ratio is currently 0.78 which is very much in line with where it has been over the past decade. That suggests that there is little reason to believe that Altria is in danger of slashing the dividend in the near future.
Altria’s P/E ratio is also very low at the moment. Investors aren’t as interested in cigarette stocks now as they once were because people simply smoke less. I’d argue that that’s an opportunity. Yes, revenues are declining but Altria is paying investors to stick with it as it figures out how to deliver nicotine based revenues in this new era.
NextEra Energy (NEE)
NextEra Energy (NYSE:NEE) is one of the most balanced blue-chip stocks to buy for income available in the stock market. The company itself is well diversified and positioned to provide growth but also remains reliable at the same time.
Next era energy constitutes two businesses: one, the largest electric utility firm, Florida Power & Light, and the other, NextEra Energy Resources, the biggest wind and solar firm globally. Thus, investors benefit from the steady income provided by a utility firm while also gaining exposure to growth inherent in wind and solar.
The company anticipates EPS growth in the 6-8% range through the year 2026. Those who choose to invest in NEE shares will receive a dividend yielding more than 3% presently. What’s more, NEE Shares are rebounding and have plenty of room to continue to do so. Utility stocks recently took a beating as bond yields rose to historic highs. Their returns made pale in comparison. However, those yields have since fallen back to the 4% level making utility stocks again look attractive. NextEra Energy is one of the best in that class among blue-chip investments.
McDonald’s (NYSE:MCD) is pivoting to take advantage of an opportunity that could drastically improve its margins. Meanwhile, it continues to offer one of the most fundamentally strong investment cases, period. In short, there’s a lot to like about McDonald’s and its stock at the moment.
The pivot I’m referring to of course is CosMc’s. McDonald’s recently opened the spin-off chain which serves a variety of unique drinks and snacks. CosMc’s is currently being tested outside of McDonald’s Chicago headquarters with plans to open 10 locations in Texas in 2024. It’s a clear sign that the company is looking to compete with the likes of Starbucks and cut into their highly profitable drink sales. Further, McDonald’s plans to open 10,000 additional restaurants In the next 4 years, mostly abroad.
The push to increase its global presence is logical given that international sales increased by 8.8% in the third quarter. That said, domestic sales weren’t far behind, increasing by 8.1%. McDonald’s clearly has a very strong base business. However, it also has a lot of opportunity to both increase its footprint globally and also expand its margins with drinks based sales at CosMc’s.
Kimberly-Clark (NYSE:KMB) is just about as boring as a company can be. Selling paper products including tissue and toiletries isn’t very interesting to many people. But sometimes boring is good, which is often the case with many defensive stocks.
Kimberly-Clark, like so many other firms, has had a tumultuous run over the past few years. The pandemic was initially a boon to the company as consumers flocked to stores to stock up on tissues, toilet paper and other things the company produces. Then supply chain issues and inflation caught up to the company and suddenly it wasn’t as strong as it had been. Again, not an uncommon story during the pandemic.
Kimberly-Clark seems to be through the worst of it and the company is expected to increase its EPS by 7% in 2024 after growing rapidly in Q3. The analysts tracking Kimberly-Clark expect that it will provide moderate returns based on share price alone but it also includes a dividend yielding 3.9% presently. That will be enough incentive for many income lovers to buy.
Broadcom (NASDAQ:AVGO) is a dividend investor’s dream with strong exposure to growth sectors. The company provides software solutions to the semiconductor industry which is intimately tied to artificial intelligence. Income investors will be very pleased to note that the company increased its dividend by 14% in the third quarter. The stock has recently grown quite quickly but still has room to grow further.
As strong as Broadcom has been in 2023, 2024 is shaping up to be even better. Broadcom expects that its semiconductor business will grow at mid-to-high single digit rates. The company also expects that its acquisition of VMware will be transformational. The company expects that its revenues will increase by 40% to 50 billion in 2024. VMware is expected to contribute substantially to that growth.
Broadcom is one of a handful of blue-chip dividend stocks that are well ingrained into the fabric of Silicon Valley. It’s an easy choice for income investors looking for blue-chip stocks to buy for income and reminds me a lot of Cisco Systems (NASDAQ:CSCO) in that regard.
Realty Income (O)
Realty Income (NYSE:O) is a somewhat unique stock to consider for income lovers. For one, Realty Income pays its dividend on a monthly basis whereas most pay quarterly. Further, Realty Income operates as a triple net Real Estate Investment Trust ( ).
Triple net REITs are operationally unique in that they push certain costs on to the tenant rather than the landlord. That results in lower risks overall. In turn, that makes Realty Income more stable than its competitors. That assertion is substantiated by the fact that the company has increased its dividend for 25 years consecutively. Meanwhile, the dividend yields 5.3% which is attractive but not extreme by comparison with other REITs.
There’s more to like about Realty Income. The company divested its office space portfolio a few years ago which looks prescient given everything that has happened with firms such as WeWork (OTCMKTS:WEWKQ). 2024 promises to be a better year overall and lower lending costs could propel the firm higher still.
Walmart (NYSE:WMT) is a stock that doesn’t offer a ton of income with a dividend that yields a relatively moderate 1.45%. However, it’s simply one of the biggest and best companies in the world and it deserves investor attention.
In particular, Walmart is interesting because the company is rapidly adapting to continued growth in e-commerce. Walmart is known to be the biggest physical retailer globally but continues to compete with Amazon (NASDAQ:AMZN) to claw away market share in the e-commerce sector.
Walmart’s overall revenues grew by 5.2% during the third quarter which was a strong result in and of itself. However, its e-commerce growth was substantially higher at 15%. Walmart dominates the world of brick and mortar retail, grocery retail, and is making a substantial push into e-commerce retail. Given its size and resources, it’s difficult to make a logical argument against investing in WMT shares at this point.
On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.