Updated on August 24th, 2022 by Bob Ciura
Large cap stocks represent businesses with market capitalizations between $10 billion and $200 billion.
It is likely that at some point, investors have come across the term market capitalization (or market cap), although many investors may not know what the term means. But the concept of market capitalization is very straightforward. Market capitalization simply refers to the total value of a company’s outstanding stock.
There are hundreds of large cap stocks to choose from. With this in mind, we have compiled a list of over 400 large-cap stocks in the S&P 500 Index, with market caps of $10 billion or more.
You can download your free copy of the large-cap stocks list, along with relevant financial metrics like price-to-earnings ratios, dividend yields, and payout ratios, by clicking on the link below:
This article will discuss large cap stocks, and an analysis of our top 7 large-cap stocks, ranked according to expected total returns in the Sure Analysis Research Database.
Table of Contents
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- Overview of Large Cap Stocks
- Top Large Cap #7: Qualcomm Inc. (QCOM)
- Top Large Cap #6: Baxter International (BAX)
- Top Large Cap #5: State Street Corp. (STT)
- Top Large Cap #4: V.F. Corp. (VFC)
- Top Large Cap #3: Verizon Communications (VZ)
- Top Large Cap #2: Comcast Corporation (CMCSA)
- Top Large Cap #1: Equitable Holdings (EQH)
Overview of Large-Cap Stocks
To calculate a stock’s market capitalization, simply multiply the share price by the number of outstanding shares. For example, a stock with a share price of $100 and 1 million shares outstanding, will have a market capitalization of $100 million. While this is certainly a lot of money, in terms of the stock market, this stock would qualify as a micro-cap.
Stocks classified by market capitalization are separated into multiple tiers. At the bottom is micro-caps—these are very small companies with market capitalizations below $300 million.
Next are small caps, which have market capitalizations of $300 million to $2 billion. The most popular index of small-cap stocks is called the Russell 2000.
After small caps, investors can choose to buy mid-cap stocks, which generally have market capitalizations of $2 billion to $10 billion.
The biggest stocks, with market caps above $200 billion, are called mega-cap stocks. Just below mega-caps are called large caps, which have market caps above $10 billion.
Investors are likely familiar with large-cap stocks, as these are the kinds of companies that populate the most well-known index, the Dow Jones Industrial Average.
Related: See the 10 highest yielding Dow Jones Industrial Average stocks, the ‘Dogs of the Dow’ here.
The Top 7 Large Cap Stocks To Buy Right Now
With all of the above in mind, we created a list of over 400 stocks that each have market capitalizations above $10 billion. But for long-term income investors, these stocks must be filtered down to the best buys today.
The following 7 stocks represent large-caps with market capitalizations above $10 billion, but they also have durable competitive advantages, long-term growth potential, and all pay dividends to shareholders. Some have increased their dividends each year, for many years.
These 7 stocks are ranked by five-year expected total returns. A qualitative assessment of their business models and growth potential was also applied. Because of this, no Master Limited Partnerships (or MLPs for short) were included in the rankings, due to their unique risk factors.
In addition, no more than 3 stocks from any individual sector were included in the top 7 list, to ensure diversification of the list. And, only stocks based in the U.S. were considered. Plus, only stocks with current dividend yields above the S&P 500 Index average were included, to focus on attractive income-producing stocks.
Finally, only stocks with Dividend Risk scores of C or better were included. This step was taken to focus on stocks with sustainable payouts in addition to their high yields. Stocks are ranked by 5-year annual expected return, from lowest to highest.
Top Large Cap #7: Qualcomm Inc. (QCOM)
- 5-year expected returns: 16.4%
Qualcomm develops and sells integrated circuits for use in voice and data communications. The chip maker receives royalty payments for its patents used in devices that are on 3G and 4G networks. Qualcomm has a current market capitalization of $158 billion and should generate sales of more than $44 billion this year.
On April 13th, 2022, Qualcomm increased its quarterly dividend 10.3% to $0.75, marking the company’s 20th consecutive year of dividend growth. On July 27th, 2022, Qualcomm announced results for the third quarter of fiscal year 2022 for the period ending June 26th, 2022 (the company’s fiscal year ends September 30th, 2022).
Revenue was higher by 37.3% to $10.9 billion, which was $50 million more than expected. Adjusted earnings-per-share of $2.96 compared very favorably to $1.92 in the previous year and was $0.09 ahead of estimates. Revenues for Qualcomm CDMA Technologies, or QCT, grew 45% to $9.4 billion.
Source: Investor Presentation
Handsets, Internet of Things, RF frontend, and Automotive grew 59%, 31%, 9%, and 38%, respectively. Qualcomm Technology Licensing, or QTL, improved by 2% to $1.5 billion. Qualcomm repurchased four million shares at an average price of $125 during the quarter.
Leadership forecasts adjusted earnings-per-share of $3.00 to $3.30 for the fourth quarter, compared to consensus of $3.25. Based on the midpoint of company guidance, we expect Qualcomm will earn $12.55 in fiscal year 2022, which would be a 47% increase from 2021.
We expect 7% annual EPS growth for Qualcomm over the next five years. We also feel the stock is undervalued, and an expanding P/E multiple could boost annual returns moving forward. The stock also has a dividend yield of 2%, leading to expected returns of 16.4% per year over the next five years for QCOM stock.
Click here to download our most recent Sure Analysis report on QCOM (preview of page 1 of 3 shown below):
Top Large Cap #6: Baxter International (BAX)
- 5-year expected returns: 16.4%
Baxter International develops and sells a variety of healthcare products, including biological products, medical devices, and connected care services devices used to monitor patients. Its products are used in hospitals, kidney dialysis centers, nursing homes, doctors’ offices, and patients at home under physician supervision. Baxter was founded in 1931 and has a market cap of $30 billion.
On July 28th, 2022, Baxter International reported Q2 2022 results for the period ending June 30th, 2022. For the quarter, the company reported adjusted diluted earnings-per-share of $0.87, which represented a year-over-year increase of 9%. Baxter reported a 21% total sales growth when including the Hillrom acquisition, but just 3% sales growth when excluding the Hillrom acquisition.
Source: Investor Presentation
Baxter’s full year guidance for 2022 is 2-3% in operational sales growth, when excluding the Hillrom acquisition. Additionally, the company slashed full year adjusted earnings-per-share guidance from $4.12 – $4.20 all the way down to $3.60 – $3.75.
Shares appear undervalued, with a P/E ratio of 16.0, which is below our fair value estimate of 20. We also expect 10% annual earnings-per-share growth. Lastly, Baxter stock has a 1.9% dividend yield. Putting it all together, we expect total returns of 16.4% per year for Baxter stock.
Click here to download our most recent Sure Analysis report on BAX (preview of page 1 of 3 shown below):
Top Large Cap #5: State Street Corp. (STT)
- 5-year expected returns: 16.5%
State Street Corporation is a Boston based financial services company which traces its roots back to 1792. State Street is one of the largest asset management firms in the world with approximately $4 trillion of assets under management and $44 trillion of assets under custody and administration.
In September of 2021, State Street announced the acquisition of Brown Brothers Harriman Investor Services for $3.5 billion, which would make State Street the number one asset servicing firm globally. Asset servicing provides back-end operations for many of the world’s most popular funds and ETF’s. State Street’s main competitors include BlackRock, Bank of New York Mellon, and Vanguard.
In mid-July, State Street reported (7/15/22) financial results for the second quarter of fiscal 2022. Fee revenues dipped -6% over last year’s quarter due to headwinds from weaker stock markets and bond markets.
Source: Investor Presentation
However, net interest income grew 25% thanks to higher interest rates and the bank generated high forex trading earnings and kept its total expenses essentially flat. As a result, its earnings-per-share grew 11% sequentially, from $1.57 to $1.74, and exceeded the analysts’ consensus by $0.20.
We expect annual returns of 16.5% per year for State Street. This will be driven by 7% expected EPS growth, plus the 3.2% dividend yield and a sizable boost from an expanding P/E multiple.
Click here to download our most recent Sure Analysis report on State Street (preview of page 1 of 3 shown below):
Top Large Cap #4: V.F. Corp. (VFC)
- 5-year expected return: 16.7%
V.F. Corporation is one of the world’s largest apparel, footwear and accessories companies. The company’s brands include The North Face, Vans, Timberland and Dickies. The company, which has been in existence since 1899, generated over $11 billion in sales in the last 12 months.
In late July, V.F. Corp reported (7/28/22) financial results for the fiscal 2023 first quarter. Revenue of $2.26 billion rose 3.2% year over year and beat analyst estimates by $20 million. The North Face brand led the way with 37% currency-neutral revenue growth in the quarter.
However, inflation took its toll on margins and profits. Gross margin of 53.9% for the quarter declined 260 basis points, while operating margin of 2.8% declined 640 basis points. As a result, adjusted EPS declined 68% to $0.09 per share.
Adjusted earnings-per-share grew 67%, from $0.27 to $0.45, but missed analysts’ consensus by $0.02. For the new fiscal year, V.F. Corp expects revenue growth of at least 7% and adjusted earnings-per-share of $3.30 to $3.40.
We expect 7% annual EPS growth over the next five years. VFC stock also has a dividend yield of 4.6%. Annual returns from an expanding P/E multiple are estimated at ~5.1%, equaling total expected annual returns of 16.7% through 2027.
Click here to download our most recent Sure Analysis report on V.F. Corp. (preview of page 1 of 3 shown below):
Top Large Cap #3: Verizon Communications (VZ)
- 5-year expected returns: 17.0%
Verizon Communications was created by a merger between Bell Atlantic Corp and GTE Corp in June 2000. Verizon is one of the largest wireless carriers in the country. Wireless contributes three-quarters of all revenues, and broadband and cable services account for about a quarter of sales. The company’s network covers ~300 million people and 98% of the U.S.
On July 22, 2022, the company reported the fiscal year’s second-quarter and first six months results. Revenue was flat year over year (YoY) at $33.8 billion for the quarter compared to the second quarter in 2021. Earnings came in at $1.24 per share, a decrease of 11.4% compared to the $1.40 per share the company made in 2Q201.
Source: Investor Presentation
The company had a net addition of 268,000, including 256,000 fixed wireless net additions. Total broadband net additions increased by 39,000 from first-quarter 2022, and fixed wireless net additions increased by 62,000 from first-quarter 2022.
The cash flow from operations was down for the year’s first half from $20.4 billion to $17.7 billion. While capital expenditures were up $2.4 billion to $10.5 billion in the first half. Thus, Free cash flow for the quarter was down from $11.7 billion to $7.2 billion for the first half of the year.
We expect annual returns of 17.0% over the next five years, consisting of 4% EPS growth, the 5.9% dividend yield, and a 7.1% annual return from an expanding P/E multiple.
Click here to download our most recent Sure Analysis report on VZ (preview of page 1 of 3 shown below):
Top Large Cap #2: Comcast Corporation (CMCSA)
- 5-year expected return: 17.7%
Comcast is a media, entertainment and communications company. Its business units include Cable Communications (High-Speed Internet, Video, Business Services, Voice, Advertising, Wireless), NBCUniversal (Cable Networks, Theme Parks, Broadcast TV, Filmed Entertainment), and Sky, a leading entertainment company in Europe that provides Video, High-speed internet, Voice, and Wireless Phone Services directly to consumers.
Comcast reported its Q2 2022 results on 07/28/22. For the quarter, the company’s revenues climbed 5.1% to $30.0 billion, adjusted EBITDA (a cash flow proxy) rose 10.1% to 9.8 billion, adjusted earnings-per-share (EPS) climbed 20.2% to $1.01, and it generated free cash flow (FCF) of $3,170 million.
Source: Investor Presentation
Comcast has had 14 consecutive dividend increases. The fast dividend growth was possible through solid earnings growth and a safe dividend payout ratio. Its dividend is well-covered by earnings and cash flows. Comcast is one of the largest players in the entertainment industry. New market entrants would have to spend many billions of dollars to establish as a key cable player or entertainment network.
The cable industry is impacted by the nationwide cord-cutting trend, though, as some customers are ditching traditional pay-TV entirely. Comcast has so far been able to withstand this trend through growth from its other businesses.
Click here to download our most recent Sure Analysis report on CMCSA (preview of page 1 of 3 shown below):
Top Large Cap #1: Equitable Holdings (EQH)
- 5-year expected returns: 22.5%
Equitable Holdings is a leading financial services company specializing in Individual retirement, Group Retirement, Investment Management and Research, and Protection Solutions. With a history tracing back to 1859, this $11.4 billion market cap company has raised its dividend every year since 2018.
Source: Investor Presentation
Equitable Holdings reported Q2 2022 earnings on August 3rd, 2022. Revenue of $5.17 billion increased 75% year-over-year and beat estimates by $1.85 billion. Adjusted earnings-per-share of $1.31 also beat by $0.05 per share. The company reported AUM of $754 billion at quarter-end, down 13% due to declining markets partially offset by net inflows. Book value per common share excluding accumulated other comprehensive income was $25.41 at quarter-end.
Insurance companies are stable non-cyclical businesses with generally reliable revenue and income streams that allow them to pay consistent dividends and return capital to shareholders. Equitable Holdings has certainly fit that mold, with its performance since the AXA spin-off showing consistently increasing earnings and dividends, as well as regular share buybacks.
While the company could certainly stand to increase its dividend a bit faster, its currently low payout ratio gives them some breathing room that will be valuable in the current era of increasing inflation and interest rates.
We expect 6% annual earnings growth over the next five years for EQH. The stock also appears to be significantly undervalued.
Based on expected EPS of $6.55, shares of EQH trade for a forward P/E ratio of 4.6. Our fair value P/E estimate is a P/E of 9. Lastly, EQH has a 2.5% dividend yield, leading to total expected returns of 22.5% per year over the next five years.
Click here to download our most recent Sure Analysis report on EQH (preview of page 1 of 3 shown below):
With so many various terms, investing can seem overly complex. Market capitalization is a term all stock market investors should understand, and the good news is that it is a fairly simple concept. The market cap of a stock refers to the total value of all its outstanding shares.
Market cap gives investors a better gauge of a company’s size, which can also give clues about its competitive advantages and future growth potential.
Large-caps are generally safer than small-caps, because they are less volatile and tend to have more established business models. Large-caps also have a greater tendency to pay dividends to shareholders. For these reasons, income investors looking to reduce volatility in their stock portfolios should give special consideration to large caps.
In particular, we believe the 7 large cap stocks on this list are leaders in their respective industries, with proven business models and attractive dividends.
The following lists contain many more quality dividend stocks to consider:
- The Dividend Aristocrats List: S&P 500 stocks with 25+ years of consecutive dividend increases.
- The High Yield Dividend Aristocrats List is comprised of the Dividend Aristocrats with the highest current yields.
- The Dividend Kings List: with 50+ years of consecutive dividend increases – the Dividend Kings are the “best-of-the-best” when it comes to dividend longevity.
- The High Yield Dividend Kings List is comprised of the 20 Dividend Kings with the highest current yields.
- The High Dividend Stocks List: stocks that appeal to investors interested in the highest yields of 5% or more.
- The Monthly Dividend Stocks List: stocks that pay dividends every month, for 12 dividend payments per year.
- The 20 Highest Yielding Monthly Dividend Stocks: Monthly dividend stocks with the highest current yields.
- The Dividend Champions List: stocks that have increased their dividends for 25+ consecutive years.
Note: Not all Dividend Champions are Dividend Aristocrats because Dividend Aristocrats have additional requirements like being in The S&P 500.
- The Dividend Contenders List: 10-24 consecutive years of dividend increases.
- The Dividend Challengers List: 5-9 consecutive years of dividend increases.
- The Best DRIP Stocks: The top 15 Dividend Aristocrats with no-fee dividend reinvestment plans.