In the beginning of 2024, the broader indexes were being driven higher mostly by mega-cap growth stocks. But the market’s leadership has changed in recent months, with stodgy blue chip dividend and value stocks posting sizable gains.
For example, Nvidia is down 3.1% in the last three months while the S&P 500 is up 3.2% and the Dow Jones Industrial Average has increased 7.1%. Meanwhile, Dow components Coca-Cola (NYSE: KO), Home Depot (NYSE: HD), and McDonald’s (NYSE: MCD) are up even more.
Here’s why these three blue chip dividend stocks could be solid buys in October for folks looking to generate passive income.
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Coca-Cola is returning to growth
Coca-Cola is an excellent example of why a stodgy, low-growth company can be a great investment when it exceeds investor exceptions.
Coca-Cola is an established, mature company with a global beverage portfolio. Investors likely gravitate toward buying and holding Coke stock for steady earnings and dividend growth, and because it can deliver results no matter what the economy or the rest of the stock market is doing. For this reason, Coke doesn’t have to provide breakneck double-digit earnings growth to impress investors — it just has to grow its earnings enough to justify reasonable dividend raises while maintaining a solid balance sheet.
Since Coke’s most recent dividend raise was a healthy 5.4% increase and the company is projected to report record earnings this fiscal year, it’s understandable why the stock has been on a tear in recent months.
KO data by YCharts. Coca-Cola, Home Depot, and McDonald’s are crushing the broader indexes over the last three months.
After its sales nosedived during the pandemic’s height, Coke did an excellent job navigating inflationary pressures. The company’s pricing power has been on full display as it continues to make the most of its growing portfolio of soft drinks, coffee, tea, juice, energy drinks, water, and sparkling water.
The run-up in Coke’s stock price has dropped its yield to 2.7% and pushed its price-to-earnings (P/E) ratio above historical levels….
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