2019 Blue Chip Stocks List: 271 Best Safe Dividend Stocks Now Sure Dividend

Sure Dividend

High-Quality Dividend Stocks, Long-Term Plan
Click Here For Our Top 10 Retirement Stocks NowMember's Area

2019 Blue Chip Stocks List: 271 Best Safe Dividend Stocks Now


Updated on November 6th, 2019 by Bob Ciura

Spreadsheet data updated daily

In poker, the blue chips have the highest value. We don’t like the idea of using poker analogies for investing. Investing should be far removed from gambling.

With that said, the term “blue chip” has stuck for a select group of stocks….

So what are blue chip stocks?

Blue chip stocks are established, safe, dividend payers. They are often market leaders and tend to have a long history of paying rising dividends. Blue chip stocks tend to remain profitable even during recessions.

At Sure Dividend, we define Blue Chip stocks as companies that are members of 1 or more of the following 3 lists:

You can download the complete list of all 271 blue chip stocks below:

 

Click here to download your Excel spreadsheet of all 271 blue chip stocks, including metrics that matter like dividend yield and the price-to-earnings ratio.

You can view a preview of our blue chip stocks spreadsheet below:

In addition to the Excel spreadsheet above, this article covers our top 10 best blue chip stock buys today as ranked using expected total returns from The Sure Analysis Research Database. Our top 10 best blue chip stock list excludes MLPs and REITs.

We also cover the 10 highest-yielding blue chip stocks in this article, excluding MLPs. And, we provide a sortable table of all blue chip stocks for quick reference.

The table of contents below allows for easy navigation.

Table of Contents

 

Looking for even more information and ideas for blue chip stocks? Watch the video below.

 

The spreadsheet and table above give the full list of blue chips. They are a good place to get ideas for your next high quality dividend growth stock investment…

Our top 10 favorite blue chip stocks are analyzed in detail below.

The 10 Best Blue Chip Buys Today

The 10 best blue chip stocks as ranked by expected total return from The Sure Analysis Research Database (exluding REITs and MLPs) are analyzed in detail below.

#10: Walgreens Boots Alliance (WBA)

Walgreens Boots Alliance is a leading pharmacy retailer, with over 18,500 stores in 11 countries. It also operates one of the largest global pharmaceutical wholesale and distribution networks in the world, with more than 390 centers that deliver to nearly 230,000 pharmacies, doctors, health centers and hospitals each year.

You can view a longer discussion of Walgreens’ dividend safety in the following video:

 

 

In late October (10/28/19) Walgreens reported fiscal fourth-quarter and full-year financial results. Quarterly revenue of $34 billion increased 2.6% on a constant-currency basis, while adjusted earnings-per-share declined 2.9% year-over-year.

The core Pharmacy USA segment accounted for the bulk of Walgreens’ fourth-quarter sales growth. Retail Pharmacy USA organic comparable-store sales increased 3.4% compared with the same quarter a year ago. Pharmacy sales, which accounted for 75% of the division’s sales, increased 5.4% on a comparable basis, primarily due to higher brand inflation, prescription volume growth, and growth in central specialty sales.

Source: Earnings Slides

For the full fiscal year, Walgreens reported revenue of $137 billion, up 5.8% on a constant-currency basis. Adjusted earnings-per-share came to $5.99, up 0.5% from the previous year. Walgreens also gave fiscal 2020 guidance, which calls for flat adjusted earnings-per-share from fiscal 2019.

Walgreens continues to be challenged by lower reimbursements and weak store traffic, but fortunately the pharmacy business remains healthy. Walgreens also has a plan to revitalize performance in its core retail pharmacy operation, through investments in digital capabilities and a renewed focus on cost efficiency. Walgreens plans to significantly cut costs in order to restore profit growth.

While e-commerce retailers are a persistent threat, Walgreens still possesses durable competitive advantages. First, Walgreens has leading market share in pharmacy retail with thousands of store locations that provide convenience to consumers. This brand strength means customers keep coming back to Walgreens, providing the company with stable sales and growth.

Walgreens is also a strong long-term dividend growth stock, because of its recession-resistant business model. Consumers typically cannot forego purchasing medicine and filling prescriptions, even during a recession. Walgreens increased its adjusted earnings-per-share from 2007 through 2010, during the Great Recession.

Walgreens stock trades for a P/E ratio of 10.5x, which is below our fair value estimate of 12.0x. Expansion of the valuation multiple could fuel 2.7% annual returns, as will expected EPS growth of 5% and the 3.1% dividend yield. Total returns are expected to reach nearly 11% per year through 2024.

#9: Exxon Mobil (XOM)

Exxon Mobil is an energy giant with a market capitalization of $307 billion. It is an integrated super-major, with operations across the oil and gas industry. In 2018, the oil major generated 60% of its earnings from its upstream segment, 26% from its downstream (mostly refining) segment and the remaining 14% from its chemicals segment.

In early November, Exxon reported (11/1/19) financial results for the third quarter of fiscal 2019. The company grew its upstream liquids production by 5% over last year’s quarter mostly thanks to impressive growth in the Permian Basin, where output grew 4% for the quarter. Exxon Mobil generated over $9 billion in operating cash flow last quarter.

Source: Earnings Slides

We remain positive regarding Exxon’s long-term growth prospects. The oil major has greatly increased its capital expenses in order to grow its production from 4.0 to 5.0 million barrels per day by 2025. The Permian Basin will be a major growth driver, as the oil giant has about 10 billion barrels of oil equivalent in the area and expects to reach production of more than 1.0 million barrels per day in the area by 2024. Guyana, one of the most exciting growth projects in the energy sector, will be the other major growth driver. The company has nearly doubled its estimated reserves in the area, from 3.2 billion barrels in early 2018 to more than 6.0 billion barrels now.

Exxon Mobil stock trades for a 2019 price-to-earnings ratio of 20.7, higher than our fair value estimate of 13. Contraction of the valuation multiple could reduce annual returns by 8.9% per year. However, expected earnings-per-share growth of 17.4% should offset this. Including the 4.8% dividend yield, we expect total annual returns of 13.3% per year.

#8: National Fuel Gas (NFG)

National Fuel Gas Co. is a diversified energy company that operates in five business segments: Exploration & Production, Pipeline & Storage, Gathering, Utility, and Energy Marketing. The company’s largest segment is Exploration & Production. National Fuel Gas was founded in 1902 and has grown to a market capitalization above $4 billion.

Source: Earnings Slides

With 49 years of consecutive dividend increases, National Fuel Gas is one year away from joining the list of Dividend Kings.

National Fuel Gas recently reported its fourth quarter and full fiscal year financial results. Adjusted operating earnings-per-share increased 10% for the fourth fiscal quarter, and 3% for the full fiscal year.

The company saw broad-based growth last fiscal year. Its exploration and production segment grew net production by 19%, reaching the highest output level in company history. National Fuel Gas ended fiscal 2019 with proved reserves of 3.1 trillion cubic feet of equivalents, an increase of 23% from the previous fiscal year. Separately, gathering segment revenues increased 18% on higher throughput from Seneca, while utility segment net income increased 19% over fiscal 2018.

National Fuel Gas has a healthy balance sheet while its interest coverage level stands at a decent level, around 6.0. Moreover, its dividend payout ratio is sufficiently low (around 50%) to enable continued dividend growth even if earnings stall temporarily.

National Fuel Gas’ competitive advantage is its combination of regulated and stable businesses (like pipelines and utilities) with cyclical and potentially higher-growth sectors (like exploration & production). This allows the company to endure difficult operating environments with less difficulty than its peers who may focus exclusively on the more cyclical areas of the energy sector.

We expect total annual returns of 11.6% per year over the next five years, comprised of 2% annual EPS growth, the 3.8% dividend yield, and a ~5.8% annual boost from valuation expansion.

#7: Invesco Ltd. (IVZ)

Invesco is a global investment management firm. It has more than 7,000 employees and serves customers in more than 150 countries. Invesco currently trades with a market capitalization of $8.0 billion and has over $1.1 trillion of assets under management (AUM).

Last quarter, Invesco’s net revenue increased 19%, primarily due to acquisitions. Average AUM increased 12.5% for the quarter. Thanks to synergies, operating margin expanded by more than four percentage points for the quarter, leading to 7.7% earnings-per-share growth.

Source: Investor Presentation

Invesco is investing heavily in growth, mainly through acquisitions. First, Invesco acquired Oppenheimer Funds for ~$5.7 billion. The deal was for $4 billion in preferred shares and 81.9 million Invesco shares. This acquisition is expected to boost earnings-per-share by ~18% in 2019. Acquiring Oppenheimer Funds grew Invesco into becoming the 6th-largest U.S. retail investment management company.

Separately, Invesco also acquired the ETF business from Guggenheim Investments for $1.2 billion. Invesco also made a significant investment in financial technology with its acquisition of Intelliflo, a leading technology platform for financial advisors that supports approximately 30% of all financial advisors in the U.K.

Invesco ranks well in terms of dividend safety with an expected payout ratio of 53% for fiscal 2019. This should allow the company to continue increasing its dividend on an annual basis going forward. Invesco also has a strong balance sheet, with a credit rating of BBB+ from Standard & Poor’s.

Invesco ranks well in terms of dividend safety with an expected payout ratio of 53% for fiscal 2019. This should allow the company to continue increasing its dividend on an annual basis going forward. Invesco also has a strong balance sheet, with a credit rating of ‘A’ from Standard & Poor’s.

Invesco stock trades for a 2019 P/E ratio of 7.4, compared with our fair value estimate of 8. Expansion of the P/E multiple could fuel 1.6% annual returns. In addition to the 7.2% dividend yield and expected EPS growth of 3% per year, annual returns are expected to reach 11.8% per year.

#6: Simon Property Group (SPG)

Simon Property Group is a real estate investment trust (REIT) that was formed in 1993. The trust focuses on retail properties, mainly in the US, with the goal of being the premier destination for high-end retailers and their customers. The trust has interests in about 230 different properties that amount to nearly 200 million square feet of leasable space. Simon produces about $5.8 billion in annual revenue and has a market capitalization of $56 billion. The company has a diversified tenant portfolio.

Source: Earnings Slides

Simon reported third-quarter earnings on October 30th. Funds-from-operation (FFO) on a per-share basis came to $3.05, flat from the same quarter last year. Adjusting for expensing internal leasing costs of approximately $0.03 per diluted share in the year-ago period, FFO per diluted share increased 1.0%

Simon’s FFO history is quite good in that it saw only a minor dip in profitability during the Great Recession. Funds from operations have since more than doubled. Simon’s focus on high-end retailing has proven an immense source of strength in recent years and we see that steady performance continuing. In total, we see Simon producing a 3% average annual FFO growth rate moving forward.

Despite the broad pressures facing retail real estate, Simon is still the best retail REIT in the market by many metrics. Its occupancy rates remain extremely high, hovering around 96% in recent quarters. It also charges more than $54 per square foot on average, which is tremendously high for retail space. Simon has built a niche with high-end retailers over the years such that it has the most desirable spaces and developments, and thus sees a virtuous combination of high occupancy and leasing rates.

We expect total annual returns of 11.8% per year from Simon Property Group, mostly from dividends (5.4%) and annual FFO growth (3%), with valuation expansion making up the remainder.

#5: MSC Industrial Direct (MSM)

MSC Industrial Direct is one the largest direct marketers and distributors of metalworking and maintenance, repair and operations (MRO) products in North America. The company has 12 fulfillment centers (8 in the U.S., 3 in Canada and 1 in the U.K.) and 100 branch offices, 99 of which are in the U.S. MSC stock has a market capitalization of $4.2 billion.

MSC recently reported its fourth-quarter and full-year fiscal 2019 financial results. Adjusted net sales increased 2.1% for the quarter, and 5.8% for the full year. For fiscal 2019, MSC reported adjusted earnings-per-share of $5.29 excluding severance costs, a decline of 8.8% from the previous fiscal year.

The earnings decline in fiscal 2019 was due primarily to margin pressures, including rising operating expenses and pricing weakness. In response, the company has launched a number of cost-cutting initiatives designed to boost margins in fiscal 2020 and beyond.

Source: Investor Presentation

MSC’s competitive advantage stems from its superior scale and execution. The company has over 1.6 million SKUs and yet boasts of a 99% same day order fulfillment rate (against an industry average of 60%). It is true that Amazon is a formidable threat, but thus far MSC has been able to ward off attacks through its niche market relationships. We continue to view these threats as minimal, and maintain a positive long-term growth outlook.

During the last recession MSC’s performance was typical of what investors should expect. The company saw earnings-per-share decline by 34% in 2009, but earnings quickly recovered and surpassed 2008 levels by 2011. Earnings are likely to be cyclical in the future, but the overall trend has been largely positive.

Broadly speaking, MSC’s most important growth catalysts include the steady expansion of the U.S. economy, which remains intact. In addition, larger customers are starting to consolidate vendors and focus on nationwide suppliers like MSC, which is a positive indicator of future growth.

We expect total annual returns of 12.4% per year, comprised of EPS growth (5.5%), dividends (4%), and expansion of the P/E ratio (2.9%).

#4: Farmers & Merchants Bancorp (FMCB)

Founded in 1916, Farmers & Merchants Bancorp is a locally owned and operated community bank with 32 locations in California. Due to its small market cap ($610 million) and its low liquidity, it passes under the radar of most investors. Nevertheless, F&M Bank has raised its dividend for 56 consecutive years and thus it is a Dividend King.

The company is conservatively managed and, until three years ago, had not made an acquisition since 1985. However, in the last three years, it has begun to pursue growth more aggressively. It acquired Delta National Bancorp in 2016 and increased its locations by 4. Moreover, in October-2018, it completed its acquisition of Bank of Rio Vista, which has helped F&M Bank to further expand in the San Francisco East Bay Area.

F&M recently reported a very strong quarter. For the period, net income increased to $22.8 million, or $172.51 per diluted share, an increase of 9.3% from $157.82 per diluted share in the year ago period. Net interest income for the 2019 third quarter rose 3.6% to $63.1 million, from $60.9 million in the 2018 third quarter. This was a highly impressive performance as many banks are reporting flat or declining net interest income, due to the unfavorable environment of falling interest rates.

F&M Bank is a prudently managed bank, which has always targeted a conservative capital ratio. The bank currently qualifies as the highest regulatory classification of “well capitalized” due to its strong capital ratios. Moreover, its credit quality remains exceptionally strong, as there are no non-performing loans and leases in its portfolio. The conservative management results in lower leverage and thus slower growth than leveraged banks during boom times. On the other hand, this strategy protects the company from economic downturns.

The merits of this strategy were on display during the Great Recession. While most banks saw their earnings collapse, F&M Bank incurred a modest 9% decrease in its earnings-per-share, from $28.69 in 2008 to $25.57 in 2009, and kept raising its dividend while so many large financial institutions cut their dividends.

We expect total annual returns of 12.7% per year through 2024, through EPS growth (5%), dividends (1.8%), and expansion of the P/E ratio to fair value (5.9%).

#3: Albemarle Corporation (ALB)

Albemarle is the largest producer of lithium and second largest producer of bromine in the world. The two products account for nearly two-thirds of annual sales. Albemarle produces lithium from its salt brine deposits in the U.S. and Chile. The company has two joint ventures in Australia that also produces lithium. Albemarle’s Chile assets offer a very low-cost source of lithium.

The company operates in nearly 100 countries and is composed of four segments: Lithium & Advanced Materials (49% of sales), Bromine Specialties (21% of sales), Catalysts (21% of sales) and Other (9% of sales). Albemarle has a market capitalization of $7.1 billion, with annual sales of almost $3.7 billion.

Albemarle enjoys a global leadership position across its key categories.

Source: Investor Presentation

Albemarle’s profits are quite volatile. While the company has earned $6.34 in the last 12 months, this number has been as low as $1.94 and $1.69 in 2009 and 2014. We do note that the business has been profitable every year in the last decade.

Despite volatile profits, Albemarle has a reasonable balance sheet that can continue to improve with a low dividend payout ratio.

Albemarle produces lithium from salt brine assets in Chile and two joint ventures in Australian mines. The company is also the second largest producer of bromine and a top producer of catalysts used in oil refining.
Albemarle has a long-term contract through 2043 with the Chilean government to be able to extract around 80,000 tons of lithium per year.

A key competitive advantage of Albemarle is that it ranks as the largest producer of lithium in the world. The metal is used in batteries for electric cars, pharmaceuticals, airplanes, mining and other applications. Albemarle is also a top producer of Bromine, which is used in the electronics, construction and automotive industries. The company possesses a size and scale that others cannot match, and it has exposure to multiple growth areas such as electric vehicles and consumer electronics.

We expect total annual returns of 13.6% per year through 2024, through EPS growth (8%), dividends (2.3%), and expansion of the P/E ratio to fair value (3.3%).

#2: Ameriprise Financial (AMP)

Ameriprise Financial operates in the financial sector. It is an asset manager, with a market capitalization of approximately $20 billion, with nearly 10,000 employees and $921 billion in assets under management. Ameriprise Financial’s operating segments include Advice & Wealth Management, Asset Management, Annuities, and Protection (insurance products).

Ameriprise Financial reported earnings results for the third quarter on 10/23/2019. The company earned $4.24 per share, which was $0.15 above expectations and a 13.4% increase year-over-year. Revenue grew 0.6% to $3.3 billion, which was $320 million above estimates. Assets under management hit a record high of $921 billion in the quarter. The adjusted operating earnings for the Advice & Wealth division improved 12% due to strength in client activity and increased advisor productivity. Total client assets grew 4% to a record $612 billion. Net revenues were up 8% to $1.7 billion.

Ameriprise’s steady growth over the past several years has been due largely to its growth in assets under management. The company maintains an optimistic forecast for global AUM through the end of 2020 as well.

AMP Growth

Source: Earnings Slides

Ameriprise Financial’s biggest competitive advantage is its brand strength within the asset management industry. Strong financial performance is critical to retaining and growing its assets under management. That said, Ameriprise Financial is not immune to recessions. Ameriprise’s earnings-per-share declined 13% from 2007-2009, during the Great Recession. Fortunately, the company snapped back in 2010 with 42% earnings growth.

Ameriprise’s future growth will be derived from rising AUM and share repurchases. Ameriprise recently announced the divestment of its Ameriprise Auto & Home business for $950 million in proceeds. The company will use the proceeds to pay down debt and repurchase stock, both of which will help grow future EPS. We expect 8% annual EPS growth through 2024.

The combination of valuation changes, 8% expected EPS growth, and the 2.5% dividend yield fuels expected annual returns of approximately 14.2% through 2024.

#1: Comerica Incorporated (CMA)

Comerica is a financial services company operating in three segments: The Business Bank, The Retail Bank, and Wealth Management. In addition to Texas, Comerica also does business in Arizona, California, Florida, and Michigan, serving 7 of the 10 largest cities in the U.S. At year-end 2018 the company operated 436 banking centers and held $70.8 billion in assets.

On October 16th, 2019 Comerica reported Q3 fiscal year 2019 results for the period ending September 30th, 2019. Net interest income totaled $586 million, net income equaled $292 million and earnings-per-share totaled $1.96, representing a -2.2% decline, an -8.2% decline and a 5.4% increase respectively compared to Q3 2018. Results continued to be helped by a significantly lower share count. The company’s net interest margin was 3.52%, compared to 3.60% a year ago, the Tier 1 Common Equity ratio was 9.92% compared to 11.68% and return on average assets totaled 1.61% against 1.77% previously.

The combination of stable loans and deposit growth fueled Comerica’s quarterly results.

Source: Earnings Slides

Comerica also updated its full-year 2019 outlook. The company now anticipates loans growing 4% (from 3% to 4% prior) and deposits decreasing -1% to -2% (from -2% prior). Net interest income is expected to decline 0% to -1% (from +2%). The company still anticipates net charge-offs to remain low and an income tax expense of 23%. Meanwhile, the Common Equity Tier 1 ratio is expected to be approximately 10%, as a result of the continued return of excess capital.

Comerica stock trades for a P/E ratio of 8.9, based on expected EPS of $7.90 for this year. Our fair value estimate is a P/E ratio of 11, meaning expansion of the P/E ratio could boost annual returns by 4.3% per year through 2024. With 6% expected EPS growth and a 4.1% dividend yield, Comerica’s total expected returns are 14.4% per year over the next five years.

The 10 Blue Chip Stocks with The Highest Dividend Yields

The 10 blue chip stocks with the highest dividend yields are analyzed in detail below. These stocks combine the safety that comes with being a blue chip, with high yields. MLPs are excluded from the list below, but REITs are included.

#10: Philip Morris International (PM)

Philip Morris International is a tobacco company that came into being when its parent company Altria (MO) spun off its international operations. Philip Morris sells cigarettes under the Marlboro brand, among others, internationally. Its sister company Altria sells the Marlboro brand (again, among others) in the U.S. Philip Morris has a market capitalization of $119 billon.

On October 17th, 2019 Phillip Morris reported Q3 2019 results for the period ending September 30th, 2019. For the quarter the company generated net revenue of $7.6 billion, which was up 1.8% as reported and up 7.0% on a like-for-like basis, excluding unfavorable currency fluctuations. Shipment volumes were down -5.9% for cigarettes, with every region showing a decline.

Source: Earnings Slides

Meanwhile, heated tobacco units – a much smaller portion of the business – were up 84.8% year-over-year. Collectively, shipments were down -2.1% for the entire business. Adjusted earnings-per-share totaled $1.43 against $1.44 in Q3 2018. The company’s total international market share was 28.8%.

Philip Morris also provided an updated 2019 full-year forecast. The company now expects reported earnings-per-share to come in at $4.73 or greater (from $4.94), with adjusted earnings-per-share reaching $5.14 or more per share (unchanged). Excluding currency fluctuations, the expectation is to earn $5.28 per share (also unchanged).

Philip Morris’ dividend payout ratio has never been especially low, and the ratio increased further during the last decade. At the peak, Philip Morris has paid out more than 90% of its net profits to its owners. The dividend payout ratio remains near 90% for the upcoming year. Due to strong cash generation, low capex requirements and the stability of Philip Morris’ business model during recessions the dividend still appears to be relatively well-covered.

Philip Morris has one of the most valuable cigarette brands outside the U.S. (Marlboro) and is a leader in the reduced-risk product segment with iQOS. At the same time, the company’s massive scale allows for tremendous cost advantages. This means that Philip Morris is generally a low-risk business, with regulation being the exception. Smoking bans can affect the company’s results, although Philip Morris is safer in this regard than many other tobacco companies due to its geographic diversification.

#9: AbbVie Inc. (ABBV)

AbbVie is a biotechnology company focused on developing and commercializing drugs for immunology, oncology and virology. AbbVie was spun off by Abbott Laboratories (ABT) in 2013. AbbVie has become a giant in the biotech industry, with sales of $33 billion annually and a market capitalization of $121 billion.

AbbVie reported its third-quarter earnings results on November 1st. Revenue of $8.5 billion increased 3.5% operationally. Revenue was positively impacted by strong growth from Imbruvica, grossing sales of $1.3 billion, up 29% from the previous year’s quarter.

However, Humira’s total global revenue declined by 3.2% year over year. Domestic sales growth of 10% for Humira was more than offset by a 32% decline in the international markets, due to biosimilar competition. On an adjusted basis, AbbVie grew earnings-per-share by 8.9% year-over-year.

Along with its quarterly results, the company raised its full-year guidance. AbbVie now expects 2019 adjusted EPS in a range of $8.90 to $8.92, up from $8.82 to $8.92. The new guidance range represents full-year adjusted EPS growth of 12.6%, at the midpoint.

In addition, AbbVie raised its quarterly dividend by 10%.

AbbVie’s future growth will be shaped by its organic growth, as well as its recent and massive acquisition of Allergan (AGN).

ABBV Allergan

Source: Investor Presentation

AbbVie recently announced the $63 billion acquisition of Botox-maker Allergan to further diversify its products. The combined company will have annual revenues of nearly $50 billion, based on 2018 results.

AbbVie expects the transaction to be 10% accretive to adjusted earnings-per-share over the first full year following the close of the transaction, with peak accretion of greater than 20%. We expect 9.5% annual earnings-per-share growth over the next five years.

This should allow AbbVie to not only maintain its dividend, but also continue to increase its dividend each year.

#8: Meredith Corporation (MDP)

Meredith Corporation is a media and marketing company that provides consumers products in the categories of home, family, food and lifestyles. The company’s revenues come from two divisions: National Media (~63% of sales) and Local media (~37% of sales).

Meredith Corporation’s portfolio of magazines includes Better Homes and Gardens and EveryDay with Rachael Ray. The company’s magazines are sold by the issue at newsstands, with women being the primary consumer and subscriber. The company also owns 17 television stations that reach 12 million households in the U.S. Meredith Corporation has a market capitalization of $2 billion. The company generates annual revenues of $3+ billion.

Source: Investor Presentation

Meredith Corporation released financial results for the fourth quarter of fiscal 2019 on 9/5/2019. The company earned $0.85 per share, up 23% from the previous year. Revenue fell 0.3% to $785.6 million. For the fiscal year, Meredith Corporation earned $3.12 per share, a slight decline from the previous year’s result. Revenue grew 40% to $3.2 billion. The National Media Group’s operating profit increased 17% during the quarter and 50% for the year. The divestiture of non-core assets from the Time acquisition, Fortune, and Sports Illustrated contributed to this improvement.

Local Media Group had a 25% improvement in revenue and a 50% increase in operating profit. Total advertising was up 30% due to strength from record political advertising revenues. Non-political advertising improved 9% due to growth in professional services, media and home services advertising. Meredith Corporation paid down $825 million of debt in fiscal 2019, leaving the company with $2.3 billion of long-term debt. The company expects to produce $135 million of cost synergies from the Time, Inc acquisition in fiscal 2020. This would bring total cost synergies to $565 million by the end of the year.

For fiscal 2020, Meredith Corporation expects revenues to fall in a range of $3 billion to $3.2 billion. Earnings-per-share are expected to range from $2.58 to $2.88. Achieving the midpoints of this guidance would represent a 3.1% decline in revenues and a 12.5% drop in earnings-per-share. The decrease in profitability is due to planned strategic investments in the brands that Meredith Corporation currently holds.

Meredith Corporation’s profits would likely suffer in a recession. Given that the majority of sales come from single issue newsstand magazines, consumers facing tough economic conditions might deem a magazine purchase as extravagant. While the company is not recession proof, Meredith Corporation’s key competitive advantage remains the popular magazines titles that it owns. Divesting non-core assets has also allowed the company to reduce its debt position, which should offer it some benefit in the event of a recession.

The company’s expected EPS would cover the annualized dividend of $2.30 per share. The expected dividend payout ratio of 84% is a concern, and investors should keep an eye on the company’s future quarterly reports to make sure it returns to EPS growth.

#7: Omega Healthcare Investors (OHI)

Omega Healthcare Investors is a Real Estate Investment Trust with a focus on healthcare properties. Omega Healthcare Investors (OHI) is a healthcare REIT that generates over 80% of its revenues from its skilled nursing facilities, and the remainder of its revenues from senior housing developments. Omega has a market capitalization of $9.2 billion.

Source: Investor Presentation

In the most recent quarter, adjusted FFO declined by 1.3% to $0.77 due to rising expenses and an increase in the number of shares outstanding. Adjusted FFO-per-share met analyst expectations last quarter. Operating revenue of $233 million rose from $222 million in the year-ago quarter. Looking ahead, Omega expects fourth-quarter adjusted FFO-per-share in a range of $0.76 to $0.79.

Omega’s dividend appears to be secure, as the company should enjoy favorable long-term industry dynamics. Omega benefits from some favorable secular trends. The number of elderly people in need of healthcare is expected to grow at a fast pace over the next decade. In addition, the trend is for increasing healthcare spending in the U.S. Omega will see only a small portion of its leases expire over the next decade. Moreover, it has no material debt maturities until 2022.

Omega’s dividend should be sustainable in a recession as well. The healthcare sector is much less cyclical during recessions than other sectors of the economy. During the Great Recession, Omega saw its FFO-per-share decrease only 3%. It also has an exceptional dividend growth record. While it has kept its dividend constant this quarter due to the previously mentioned headwinds, company management stated in the recent quarterly earnings release its intention to raise the dividend at some point in the near future.

Until then, the dividend appears secure, provided the company’s FFO continues to grow. Omega’s dividend payout for 2019 is fairly high at 87%, but the dividend appears sustainable as long as the company’s turnaround stays on track.

#6: Helmerich & Payne (HP)

Helmerich & Payne provides contract drilling services primarily to inland oil and gas producers in the U.S. It is the market leader in the U.S., with a market cap above $4 billion.

The company is a leading unconventional driller in the United States.

HP Driller

Source: Investor Presentation

The company incurred losses in 2016 and 2017 due to the downturn of the oil market, which began almost five years ago. As the price of oil began to plunge, oil producers reduced their production activities and thus adversely affected Helmerich & Payne’s business.

In late July, Helmerich & Payne reported (7/24/19) financial results for the third quarter of fiscal 2019 (ending 6/30/19). The company switched from a profit of $0.55 per share in the previous quarter to a loss of $1.42 per share, primarily due to an asset impairment charge of $1.97 per share. If non-recurring charges are excluded, adjusted earnings-per-share were $0.40, still much lower than those in the previous quarter. Helmerich & Payne continues to do its best in the factors it can influence. In the quarter, it achieved a 90% utilization rate in its super-spec rigs, which enjoy the strongest pricing trends.

However, oil producers have become increasingly conservative in their budgets, particularly amid volatility in oil prices. Management expected the rig count to bottom in the previous quarter but it now expects further softening in demand and hence it forecasts to end the running quarter at the lower end of a rig count of 193-203, below the rig count of 214 at the end of the most recent quarter.

Helmerich & Payne is in the early phases of a strong multi-year recovery. Given expected total assets of ~$6.5 billion in 2024 and a reasonable ratio of gross profit/assets around 20%, a gross profit around $1.34 billion can be expected. As the net income has been about 40% of the gross profit in the last few profitable years of the company and the share count is expected around 112 million, the company is likely to earn about $4.60 per share in 2024.

We view Helmerich & Payne as a high-risk, high-reward stock. Its reliance on drilling activity and the price of oil make the company’s profits volatile from year to year, particularly during a recession. That said, the stock has a high dividend yield of 7% and a very long history of annual dividend increases, which gives it broad appeal for income-focused investors.

#5: Invesco Ltd. (IVZ)

Invesco appears in both our list of best blue chips, and list of highest yielding blue chips. Click here to see our analysis of Invesco from earlier in this article.

#4: Altria Group (MO)

Altria Group is a consumer products giant. Its core tobacco business holds the flagship Marlboro cigarette brand. Altria also has non-smokable brands Skoal and Copenhagen chewing tobacco, Ste. Michelle wine, and owns a 10% investment stake in global beer giant Anheuser Busch Inbev (BUD).

Related: The Best Tobacco Stocks Now, Ranked In Order

In late October, Altria reported strong third-quarter earnings. Revenue (net of excise taxes) increased 2.3% year-over-year to $5.4 billion. Adjusted earnings-per-share came in at $1.19 increased 10% over the year-ago period. Revenue and earnings-per-share both beat analyst expectations.

Altria said it was on track to achieve $575 million in annual cost savings this year as it combats lower smoking rates in its markets.

Separately, Altria took a non-cash impairment charge of $4.5 billion related to its investment in Juul.

Fortunately, Altria has a plan to continue generating growth over the long term, even in an environment of declining smoking rates. Altria recently announced a $1.8 billion investment in Canadian marijuana producer Cronos Group, in which it purchased a 45% equity stake in the company, as well as a warrant to acquire an additional 10% ownership interest in Cronos Group at a price of C$19.00 per share, exercisable over four years from the closing date.

Source: Investor Presentation

Separately, Altria invested nearly $13 billion in e-vapor manufacturer JUUL Labs for a 35% equity stake in the company, valuing JUUL at $38 billion. These two investments give Altria access to two huge growth opportunities, marijuana and vaping.

Altria reaffirmed its guidance for 2019 full-year adjusted diluted EPS to be in a range of $4.19 to $4.27, which would be 5% to 7% growth from 2018. The company also expects 5%-8% adjusted EPS growth from 2020-2022.

The video below examines Altria’s dividend safety in detail.

 

Altria’s dividend is highly secure. The company has a target payout ratio of 80% of annual adjusted EPS. This provides a compelling shareholder payout while leaving sufficient room to invest in growth.

Altria is also highly resistant to recessions. Cigarette and alcohol sales fare very well during recessions, which keeps Altria’s strong profitability and dividend growth intact. With a target dividend payout of 80%, Altria’s dividend is secure.

#3: Taubman Centers, Inc. (TCO)

Taubman Centers is a retail REIT that acquires, develops, owns, and operates high-grade malls and shopping centers in the United States (including Puerto Rico), as well as in China and South Korea. Taubman Centers is focused on the upper end of the quality spectrum of U.S. malls and shopping centers. Taubman Centers is trading with a market capitalization of $3.2 billion.

Taubman Centers has a high-quality property portfolio.

TCO Assets

Source: Investor Presentation

Taubman Centers reported its third-quarter earnings results on October 29th. The trust generated adjusted funds from operations of $0.86 per share, a 15% decline from the same quarter last year. On the positive side, sales-per-square-foot rose 11%, marking the 13th consecutive quarter of growth in this metric. And, average rent-per-square-foot increased 2.3%.

However, growth was more than offset by higher interest expense, lower lease cancellation income and a gain on a land sale in 2018. In addition, the company’s results were impacted by the Forever 21 bankruptcy filing. Taken together, these items affected third quarter adjusted FFO per share by about $0.12 last quarter.

Taubman Centers has one of the highest-quality portfolios among mall REITs. This has allowed for above-average rent growth, and leads to compelling same center net operating income.

Another growth catalyst is the company’s malls in China and Korea, where retail sales are growing at a stronger pace than in the U.S. This allows for above-average growth in rents and net operating income. Due to the fact that there is not a lot of retail space in these countries, Taubman Centers has the potential to grow its asset base in China and Korea further.

We believe Taubman’s dividend is secure, as the company has a projected FFO payout ratio of ~73% for 2019.

#2: Occidental Petroleum (OXY)

Occidental Petroleum is an international oil and gas exploration and production company with operations in the U.S., the Middle East, and Latin America. It has a market capitalization of $37 billion. It is primarily an upstream exploration and production company, although the company does have a midstream and a chemical segments.

OXY Portfolio

Source: Investor Presentation

Occidental is primarily an exploration and production company, which leverages the company’s profits to the price of oil and gas.

On November 4th, Occidental released financial results for the third quarter of fiscal 2019. Revenue of $5.9 billion declined by 5% year-over-year, while the company reported adjusted earnings-per-share of $0.11. Occidental completed the $3.9 billion sale of its Mozambique assets and also divested its Plains interests for $650 million in the most recent quarter. It also repaid $4.9 billion of debt during the quarter, including all of its 2020 maturities.

On August 8th, Occidental closed the acquisition of Anadarko Petroleum. Occidental pursued this acquisition thanks to the promising asset base of Anadarko in Permian, which will enhance the already strong presence of Occidental in the area, and the $3 billion annual synergies it expects to achieve from the integration of the two companies.

There are great concerns that the deal will stretch the balance sheet of the company. Moody’s has stated that it will probably downgrade the company from A3 to B-. Occidental has also secured $10 billion funding from Berkshire Hathaway in exchange for preferred shares. Due to these concerns, the market has punished the stock harshly, sending it to a 10-year low level.  We too see an elevated level of risk at Occidental due to the high debt burden.

Along with quarterly earnings, Occidental announced it will cut its 2020 capital expenditure budget by 40%, to $5.4 billion. However, the company remains committed to its dividend, and it has increased its dividend for 10 years in a row.

#1: Tanger Factory Outlets (SKT)

Tanger Factory Outlet Centers is a Real Estate Investment Trust. Tanger operates, owns, or has an ownership stake in a portfolio of 40 shopping centers. Properties are located in Canada and 20 U.S. states, totaling approximately 14.4 million square feet, leased to over 500 different tenants.

Tanger’s diversified base of high-quality tenants has led to steady growth for many years.

Source: Earnings Slides

Tanger released 2019 third-quarter results on October 30th. Revenue of $119 million declined by 4%, while adjusted funds from operations (FFO) fell 7.9% year-over-year. Tanger’s occupancy rate stood at 95.9% in the most recent quarter, down only slightly from 96.0% in the previous quarter.

Occupancy is expected to decline somewhat in 2019 to a range of 95.5% to 95.8%, due to anticipated store closures by certain tenants. Fortunately, the company has maintained an occupancy rate of 95%+ for 25 consecutive years.

The dip in occupancy this year will negatively impact the company’s AFFO, but Tanger will still be able to cover its hefty dividend payment.

To be sure, Tanger stock carries risk due to the broad challenges facing its business model, as well as the risk of recession on retail properties.

Tanger has a current dividend payout of $1.42 per share annually, which represents a current yield of 8.4%. This is a very high yield and is clearly attractive for income investors. The biggest concern with a yield this high is sustainability.

We expect Tanger will generate AFFO-per-share of $2.25 for 2019. With an expected dividend payout of $1.47 per share, Tanger’s expected 2019 dividend payout ratio is 65%. This is a manageable payout ratio, which leaves room for modest annual hikes. For example, in February Tanger raised its dividend by 1.4%.

Thanks for reading this article. Please send any feedback, corrections, or questions to support@suredividend.com.


More from sure dividend
Click Here For Our Top 10 Retirement Stocks NowMember's Area