7 Blue-Chip Dividend Stocks That Won’t be Impacted by Rising Interest Rates in 2022 | MarketBeat

2022-07-30 02:50:03 By : Mr. Allen Cheng

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Stock markets move in cycles. Historically, bull markets last longer than bear markets, but both can last longer than investors expect. But inside bull markets and bear markets, there can still be volatile price changes in the opposite direction. And when the market does reverse direction, the biggest gains are made by investors that stay the course.

In a volatile market, one option for staying the course is to invest in quality blue-chip dividend stocks. Blue-chip stocks are companies that have a large market capitalization. That means there are companies in mature industries.

That maturity allows these companies to deliver consistent performance that is independent of whatever is happening with the country's monetary policy. When interest rates fall, these companies are poised for growth. And when interest rates rise, these companies have strong balance sheets that allow them to maintain pricing power and profits to provide stability.

All of this means that investors with lower risk tolerances can stay in the market without having to give up on growth. And in this special presentation, we're giving investors seven blue-chip names that investors can buy with confidence no matter what is happening with interest rates.

It’s always a good idea to have quality financial stocks like M&T Bank (NYSE:MTB) in your portfolio. When interest rates are low, these companies benefit from increased loan activity because it costs less for consumers and businesses to borrow money. And when interest rates rise, banks benefit by having the ability to earn more interest from investing their large supply of cash. This remains true even as banks increase the amount of interest they pay to their depositors.

M&T offers an appealing price-to-earnings ratio of 15x earnings a dividend yield of 2.81% and a consensus price target of $198.74 which is 17% higher than its current price of $168.96. Plus, even though the company missed on earnings in its most recent quarter, it still forecasts full-year earnings per share (EPS) of $19.84. That’s above the bank’s previous guidance and would represent a 42% year-over-year increase.

When considering stocks to buy in a bear market, consumer discretionary stocks may not be the first to come to mind. The word discretionary means that consumers have optionality as far as how they spend their money. And unlike consumer staples like paper towels, toilet paper, and toothpaste, consumers may decide to step away from sugary drinks.

However, the facts tell a different story, and Coca-Cola (NYSE:KO) has a proven history of being an exceptional choice as a defensive stock. In the last five quarters, the company has beaten on both earnings and revenue. The company trades at a P/E of 25x earnings. That’s a little higher than the sector average. However, Coca-Cola is expecting to see single-digit growth in revenue and EPS over the next five years.

That should be enough to support the consensus opinion of KO stock as a Moderate Buy. And with a dividend yield of 2.86%, long-term investors should enjoy a stable total return.

Investors looking for stability in uncertain times will enjoy the certainty of MetLife (NYSE:MET). The company is the holding company for the Metropolitan Life Insurance Company and its affiliates. This makes it one of the world’s largest insurance providers, annuities, and employee benefit programs. That also means that it will benefit from rising interest rates which should result in improving margins.

This provides a predictable revenue stream which, combined with low capital costs, makes MET stock a solid pick among blue-chip dividend stocks. At the time of this writing, MetLife has an appealing P/E ratio of 7X earnings. Revenue and earnings are expected to grow at low single-digit levels for the next five years. But that shouldn’t be too concerning when dealing with a company offering a dividend yield of 3.25%. Plus, early in 2022, the company increased its dividend for the fifth consecutive year.

Even when investing in dividend stocks, it’s a good idea to take a diversified approach. That’s the lead-in for the next stock on our list, Rogers Communications (NYSE:RCI). The Canadian-based company is one of Canada's largest communications and media corporations. The company generates revenue from the wireless, cable, and media sectors.

RCI stock is looking a little expensive, trading at 18x earnings. That puts it slightly higher than the sector average. However, with earnings per share expected to grow at around a 17% rate in the next five years, RCI stock looks like a compelling opportunity. And the company has an attractive dividend yield of 3.38%.

Analysts tracked by MarketBeat give RCI stock a 46% upside from its current price of around $46 per share.

In 2022, the mantra for investors is that quality matters when looking at stocks. And that advice is particularly true if you’re considering investing in the restaurant sector. This sector was devastated by the pandemic. And even well-established chains are struggling to recover to pre-pandemic levels amidst rising food costs and labor shortages.

However, it appears that Darden Restaurants (NYSE:DRI) has done exactly that. The Orlando-based company owns and operates a portfolio of over 1,800 restaurants, including the Olive Garden, LongHorn Steakhouse, and Capital Grille brand names.

Both revenue and profits are trending above 2019 levels. And over the next five years, revenue growth is expected to be in the low single digits, while analysts are projecting high single-digit growth in profits.

That kind of growth supports the company’s P/E ratio of 16x, which is already in line with the sector average. Darden currently has a dividend yield of over 4%, with a dividend payout of $4.64 per share on an annualized basis.

If the energy sector is beginning to lose its luster, someone forgot to tell Devon Energy (NYSE:DVN). The company is an independent oil exploration and production company and owns some of the strongest assets across the United States.

That being said, energy stocks are notoriously cyclical. However, when many companies will be showing smaller profits, Devon Energy is expected to report rising profits. That’s one reason that analysts tracked by MarketBeat give DVE stock a 38% upside from its current level. The company is also one of the most upgraded stocks in the most recent quarter.

And income-oriented investors will love the company’s dividend. It currently has a dividend yield of over 8%, and pays out over $5 per share annually. Plus, the payout ratio is 55%, leaving room for the company to continue increasing its dividend in the future.

The last stock on this list is also from the energy sector. However, investing in Schlumberger (NYSE:SLB) is a more indirect play. Specifically, Schlumberger provides technology for the energy industry. The company is one of the first companies to report second-quarter earnings and delivered a beat on both the top and bottom lines. That’s becoming a regular occurrence for the company.

And both revenue and earnings are projected to see double-digit growth over the next five years. That should help investors overlook the company’s P/E ratio, which, at around 19x, is slightly elevated for its sector.

The company’s dividend is not particularly impressive. However, as Thomas Hughes analyzed recently for MarketBeat, a little context is necessary. Like many energy companies, Schlumberger cut its dividend significantly at the onset of the pandemic. With energy stocks at the beginning of what is likely to be a multi-year growth cycle, Schlumberger looks to have plenty of room to grow its dividend in the coming years.

Staying invested in volatile times doesn't mean being foolish. But it does illustrate the importance of investors staying in the market no matter what is happening in the broader economy. Because when the market changes direction, it usually does so swiftly and aggressively.

And that's a reason why investors should be looking at blue-chip dividend stocks. In bull markets, these are not typically the high fliers. But in bear markets, these stocks are less bad and, in some cases, even deliver positive capital growth. And because these companies pay dividends, investors have another option to increase their total return.

Volatile times teach investors the significance of performing the proper due diligence. MarketBeat provides subscribers with many tools that can help you identify and research stocks to buy. One example of this is our Top-Rated Dividend Stock Screener. You can sort stocks by a number of variables, including market capitalization, dividend yield, and analyst ratings. The screener also informs you of indicators that may be causing the stock to be moving, such as an upcoming earnings report.

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