In this article, we discuss 11 best Fortune 500 dividend stocks to buy now. You can skip our detailed analysis of large-cap dividend stocks and their performance in the past, and go directly to read 5 Best Fortune 500 Dividend Stocks To Buy Now.
The Fortune 500 is an annual list compiled and published by Fortune magazine that ranks the top 500 publicly traded companies in the United States by their total revenue for their respective fiscal years. These companies are among the largest and most influential in the American economy. They span various industries, including technology, healthcare, finance, retail, energy, and more. Exxon Mobil Corporation (NYSE:XOM), Walmart Inc. (NYSE:WMT), and Amazon.com, Inc. (NASDAQ:AMZN) were the leading three companies on the Fortune 500 list. The top 10 companies combined made a massive $3.7 trillion in revenue in the list's 69th year.
Large-cap companies often gain investors' attention due to their established track record, stability, and market dominance. These companies are typically well-known, have a significant market presence, and operate across diverse industries. In addition to this, these companies are known for their perceived stability, relatively lower risk compared to smaller companies, and the potential for consistent returns. According to a report by CNBC, over the last twenty years, among various investment types, U.S. large-cap stocks delivered the most consistent returns, averaging 9.3%. Despite experiencing fluctuations in their value over time, these stocks outperformed other types of investments like small-cap stocks, international stocks, or bonds. While these alternative investments might have shown higher fluctuations or volatility in their prices, they didn't surpass the steady and relatively strong performance of U.S. large-cap stocks. This means that even though large-cap stocks might have had their ups and downs, their overall returns were more reliable and profitable compared to other investment options during this period.
Several reports have emphasized the importance of large-cap stocks in the past decade and what factors predominantly influenced their increased returns. In the last ten years, the significant surge in the performance of major technology companies has strongly impacted the returns of large-cap stocks. These tech giants experienced an incredible increase in their stock prices, collectively rising by approximately 160% during this period, as reported by J.P. Morgan. Innovative companies like Microsoft Corporation (NASDAQ:MSFT), Apple Inc. (NASDAQ:AAPL), and Amazon.com, Inc. (NASDAQ:AMZN) have dominated in their respective sectors, and the shift towards technology-driven solutions have greatly influenced the stock market.
In addition to tech giants, large-cap dividend stocks are also favored by investors as these stocks often belong to well-established companies with a history of stable earnings and cash flow. Their size and market position afford them the ability to consistently pay dividends, providing investors with a regular income stream, which is attractive, especially in uncertain market conditions. In this article, we will discuss some of the best large-cap stocks that pay dividends.
11 Best Fortune 500 Dividend Stocks To Buy Now
Photo by Ruben Sukatendel on Unsplash
Our Methodology:
For this article, we began by reviewing the current Fortune 500 list and specifically identified dividend-paying stocks among these companies. Next, we narrowed down this selection by focusing on firms with a consistent track record of increasing dividend payouts over time. From this refined list, we further filtered the companies to identify the top 11 that attracted the most hedge fund investors. We used Insider Monkey’s Q3 2023 database to gauge hedge fund interest and selected the companies that had garnered the highest number of investments from these hedge funds.
Exxon Mobil Corporation (NYSE:XOM) is an American multinational oil and gas company. It operates across various segments of the energy industry, engaging in the exploration, production, refining, and marketing of oil, natural gas, petroleum products, petrochemicals, and other related commodities.
In the third quarter of 2023, Exxon Mobil Corporation (NYSE:XOM) reported a strong cash position with an operating cash flow of $16 billion. The company's free cash flow for the quarter amounted to over $11.7 billion. During the quarter, the company returned $3.7 billion to shareholders through dividends. The company generated $90.7 billion in revenues, which makes XOM one of the best large-cap stocks on our list.
Exxon Mobil Corporation (NYSE:XOM) currently pays a quarterly dividend of $0.95 per share, having raised it by 4.4% in October this year. This marked the company's 41st consecutive year of dividend growth. As of November 25, the stock has a dividend yield of 3.63%.
The number of hedge funds tracked by Insider Monkey holding stakes in Exxon Mobil Corporation (NYSE:XOM) jumped to 79 in Q3 2023, from 71 in the previous quarter. The consolidated value of these stakes is over $4.4 billion.
10. Walmart Inc. (NYSE:WMT)
Number of Hedge Fund Holders: 80
Walmart Inc. (NYSE:WMT) is a multinational retail corporation known for its extensive chain of hypermarkets, discount department stores, and grocery stores. The company offers a quarterly dividend of $0.57 per share and has a dividend yield of 1.46%, as of September 25. The company's dividend growth streak currently stands at 50 years.
In the third quarter of 2023, Walmart Inc. (NYSE:WMT) reported revenue of $160.8 billion, which showed a 5.2% growth from the same period last year. Its operating cash flow came in at $19 billion and the company generated over $4.3 billion in free cash flow. WMT is among the best large-cap stocks on our list.
At the end of Q3 2023, 80 hedge funds in Insider Monkey's database reported having stakes in Walmart Inc. (NYSE:WMT), down slightly from 81 in the preceding quarter. The consolidated value of these stakes is nearly $6 billion. With over 9.1 million shares, Fisher Asset Management was the company's leading stakeholder in Q3.
Johnson & Johnson (NYSE:JNJ) is a global healthcare company engaged in the development, manufacturing, and marketing of a wide range of products in the pharmaceutical, medical devices, and consumer health sectors. On October 19, the company declared a quarterly dividend of $1.19 per share, which was consistent with its previous dividend. Overall, the company holds one of the longest dividend growth track records, spanning over 61 years. As of November 25, the stock has a dividend yield of 3.12%.
Johnson & Johnson (NYSE:JNJ) was a part of 84 hedge fund portfolios at the end of Q3 2023, compared with 88 in the previous quarter, as per Insider Monkey's database. The stakes owned by these hedge funds are collectively valued at $4.1 billion.
Merck & Co., Inc. (NYSE:MRK) is next on our list of the best large-cap stocks to invest in. The American pharmaceutical company is mainly focused on developing, manufacturing, and marketing a wide range of healthcare products and medicines. In its most recent quarter, the company's revenue showed a 7% year-over-year growth in its revenue of $16 billion. Not only this, but the company's revenue also beat analysts' estimates by $730 million.
Merck & Co., Inc. (NYSE:MRK) has adjusted its anticipated global sales forecast, increasing and refining the expected range. They now estimate the worldwide sales to fall between $59.7 billion and $60.2 billion. This adjustment is more focused and narrowed compared to the previous consensus estimate of $59.27 billion. Merck & Co., Inc. (NYSE:MRK) has been raising its dividends for 11 consecutive years and currently pays a quarterly dividend of $0.73 per share. The stock's dividend yield on November 25 came in at 2.87%. As of the close of Q3 2023, 85 hedge funds tracked by Insider Monkey reported holding stakes in Merck & Co., Inc. (NYSE:MRK), up significantly from 78 in the preceding quarter. The total value of these stakes is more than $5 billion.
Number of Hedge Fund Holders: 87 Broadcom Inc. (NASDAQ:AVGO) is a California-based semiconductor manufacturing company that designs and develops a wide range of semiconductor devices used in various industries. These semiconductor products include chips used in wireless networking, enterprise storage, broadband, industrial, and other applications. Broadcom Inc. (NASDAQ:AVGO), one of the best large-cap stocks, currently offers a quarterly dividend of $4.60 per share. The company holds a 12-year track record of consistent dividend growth. As of November 25, the stock's dividend yield came in at 1.88%. At the end of September 2023, 87 hedge funds in Insider Monkey's database, up from 72 in the previous quarter, owned investments in Broadcom Inc. (NASDAQ:AVGO). The consolidated value of stakes owned by these hedge funds is roughly $6.2 billion. Ken Fisher, Rajiv Jain, and Ken Griffin were some of the company's leading stakeholders in Q3.
Number of Hedge Fund Holders: 90 Union Pacific Corporation (NYSE:UNP) is one of the largest transportation companies in the US that also provides freight transportation services for various commodities. The company pays a quarterly dividend of $1.30 per share, having raised it by 10% last year. Through this increase, the company took its dividend growth streak to 16 years. The stock has a dividend yield of 2.32%, as recorded on November 25. At the end of the third quarter of 2023, 90 hedge funds tracked by Insider Monkey owned stakes in Union Pacific Corporation (NYSE:UNP), growing from 87 a quarter earlier. These stakes are collectively worth over $5.4 billion. Among these hedge funds, Soroban Capital Partners was the company's largest stakeholder in Q3.
