blue chip stocks defense

3 Blue Chip Dividend Stocks to Play Defense

Blue chip stocks offer relative safety and consistent income over the long term for income investors relying on dividends. With the threat of inflation, investors may want to opt for proven companies with established, diversified business models.

This article will discuss 3 long-term blue chip stocks to play defense. They have raised their dividends each year for over ten years, have current yields above the S&P 500 Index average, and should continue to increase their dividends for years to come.


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3 Blue Chip Dividend Stocks to Play Defense

1: Bristol-Myers Squibb (BMY)

Bristol-Myers Squibb was created when Bristol-Myers and Squibb merged on October 4th, 1989. Bristol-Myers can trace its corporate beginnings back to 1887. Today, this leading cardiovascular and anti-cancer therapeutics drug maker has annual revenues of about $47 billion. 

On October 26th, 2023, Bristol-Myers reported third-quarter results for the period ending September 30th, 2023. Revenue declined 2.2% to $10.97 billion, which was in line with estimates. Adjusted earnings-per-share were $2.00 compared to $1.99 in the prior year and $0.23 more than expected. 

Much of the decline was due to generic competition for Revlimid, down 41% to $1.23 billion. Eliquis, which prevents blood clots, grew 2% to $1.8 billion, despite generic pressures outside of the United States. Eliquis has become the top oral anticoagulant in several international markets since 2019 and had nearly $12 billion in revenue for 2022, which was a 10% increase from the prior year. Opdivo, which treats cancers such as advanced renal carcinoma, grew 4% to $1.2 billion due to demand across newer indications. 

Bristol-Myers also updated its 2023 guidance. The company now expects adjusted earnings-per-share to be in a range of $7.50 to $7.65.

Bristol-Myers has increased its dividend at a CAGR of 4.9% since 2013. The trend had been that shareholders receive a $0.01 dividend-per-quarter raise each year. However, that was broken over the past few years. We project 5% dividend growth annually over the next five years.

The company’s competitive advantage is its ability to create through research & development or acquire patents for pharmaceuticals with high potential revenue. Bristol-Myers’ top three selling pharmaceuticals, Revlimid, Opdivo, and Eliquis, have shown solid growth rates and are expected to see high peak annual sales.

BMY currently yields 4.6%, near a decade high and above the 5-year average. In addition, the equity is undervalued, trading below its 5-year and 10-year valuation ranges.

Portfolio Insight - Dividend Yield History BMY
Source: Portfolio Insight*

Related Articles About Bristol-Myers Squibb on Dividend Power

2: Emerson Electric (EMR)

Emerson Electric was founded in 1890. Since then, it has developed through organic growth, strategic acquisitions, and divestitures from a regional manufacturer of electric motors and fans into a diversified world leader in technology and engineering. Emerson’s global customer base and diverse product and service offerings generate around $15 billion in annual revenue.

It is our second blue chip stock to play defense. The company’s very impressive 67-year dividend increase streak also lands it on the prestigious Dividend Kings list.

Emerson posted fourth-quarter earnings on November 7th, 2023, and results were worse than expected on both the top and bottom lines. Adjusted earnings-per-share came to $1.29, two cents light of estimates. Revenue was up 5% year-over-year to $4.09 billion but missed expectations by $100 million. Profit was $744 million for the quarter, fractionally higher year-over-year. Earnings from continuing operations rose from 82 cents to $1.22. 

Emerson said it’s seeing softening demand in factory automation and test and measurement units, and as such, says growth won’t likely occur in fiscal 2024 until the second half of the year. The company initiated 2024 guidance at $5.15 to $5.35 in adjusted earnings per share.

Emerson is significantly changing its strategy, selling off legacy units and focusing more on automation and recurring revenue. We’re estimating growth of 6% as management remains bullish, and there are signs of improvement in organic revenue growth and margins. We still think low single-digit growth in revenue and a tailwind from the buyback will be the key drivers of earnings-per-share growth in the coming years.

Emerson’s competitive advantage is its many decades of experience building customer relationships and engineering excellence. It has a global customer base experiencing strong economic growth, and that underlying sales tailwind should power results going forward. Shares currently yield 2.2%.

Portfolio Insight - Dividend Growth EMR
Source: Portfolio Insight*

Related Articles About Emerson Electric on Dividend Power


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3: Qualcomm Inc. (QCOM)

Qualcomm designs and sells integrated circuit chips for use in voice and data communications, mainly cell phones and automotive vehicles. The chip maker also derives royalty payments for its patents used in devices that are on 3G and 4G networks. Qualcomm is our third blue chip dividend stock to play defense.

On April 12th, 2023, Qualcomm increased its quarterly dividend by 6.7% to $0.80, marking its 21st consecutive year of dividend growth, placing it on the Dividend Contender list

On November 1st, 2023, Qualcomm reported results for the fourth quarter and fiscal year 2023 for the period ending September 24th, 2023. Revenue decreased 24% for the quarter to $8.67 billion, $150 million more than expected. Adjusted earnings-per-share of $2.02 compared unfavorably to $3.13 in the previous year but was $0.11 above estimates. For the fiscal year, revenue decreased 19% to $35.8 billion, while adjusted earnings-per-share were $8.43 compared to $12.53 in the prior period. Adjusted earnings-per-share for the year also came in ahead of our projections. 

For the quarter, Qualcomm CDMA Technologies’ (QCT) revenues fell 26% to $7.4 billion. Automotive sales increased 15% to $535 million, while Handsets decreased 27% to $5.46 billion, and the Internet of Things was down 31% to $1.38 billion. Qualcomm Technology Licensing, or QTL, declined 12% to $1.26 billion. Qualcomm repurchased 25 million shares at an average price of $118.93 during the fiscal year. The firm is projected to earn $9.21 per share in fiscal 2024.

The company has grown earnings-per-share at a rate of 7% per year over the last decade. An agreement with Apple and Huawei, reduced share count, and technical leadership in 5G should permit the company to grow in the coming years. We are reaffirming our earnings-per-share growth rate of 7% through fiscal year 2028.

Qualcomm’s dividend is highly secure, with an expected dividend payout ratio near 40% for the current fiscal year. The stock currently yields 2.1%.

Portfolio Insight - Revenue QCOM
Source: Portfolio Insight*

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Bob Ciura
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Bob Ciura is President of Content at Sure Dividend. Bob has worked at Sure Dividend since October 2016. He oversees all content for Sure Dividend and its partner sites. Prior to joining Sure Dividend, Bob was an independent equity analyst. Bob received a bachelor’s degree in Finance from DePaul University, and an MBA with a concentration in Investments from the University of Notre Dame.

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