In this article, we will be looking at the 10 best large cap dividend stocks to buy now. If you want to skip our detailed analysis of large-cap stocks, and dividend investing, you can go directly to the 5 Best Large Cap Dividend Stocks to Buy Now.
Large-cap stocks usually have a market capitalization of around $10 billion or above. As compared to small-cap stocks, large-cap stocks are thus deemed more stable, low-risk, and dependable investments, as they are represented by a range of renowned and financially secure companies like AT&T Inc. (NYSE: T), Altria Group, Inc. (NYSE: MO), Mastercard Incorporation (NYSE: MA), and JPMorgan Chase & Co. (NYSE: JPM). Because of their higher financial stability, these stocks are also much likelier to be able to pay stable dividends as well.
Until this April, small-cap stocks were growing and gaining faster than their large-cap counterparts at overwhelming rates. According to a Reuters report, in the last year alone, the gain for the Russell 2000 index, which consists of mainly small-cap stocks, was about 86.7%, while the gain for the S&P 500 index, consisting mainly of large-cap stocks during the same time period was only 48.8%. Hence, investors were pouring into small-cap stocks that offered better valuation and higher gains. However, the situation did not remain the same for too long.
Large-cap stocks can be said to have begun to fight back and reclaim attention as of the start of April 2021, when the S&P 500's 5.2% gain was almost double that of the Russell 2000 index, which stood at about 2.3%. The S&P 500 also managed to outperform the Russell 2000 index in the three months preceding April as well, with a gain of about 8.5% versus the Russell 2000's 5% gain during the same time period. As such, it can be said that large-cap stocks can be considered reliable investment options not just because of their eye-popping market caps, but also because of their ability to outperform small and mid-cap stocks. Yet, it can still be challenging to choose the right large-cap stocks to invest in, which is why we have compiled a list of the best large cap dividend stocks to buy now.
Investing is becoming difficult by the day, even for the smart money. The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and February 26th 2021 our monthly newsletter’s stock picks returned 197.2%, vs. 72.4% for the SPY. Our stock picks outperformed the market by more than 124 percentage points (see the details here). We were also able to identify in advance a select group of hedge fund holdings that significantly underperformed the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 16th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
Let's now look at the 10 best large cap dividend stocks to buy now. The stocks selected for our list below were chosen on the basis of their fundamentals and growth potential based on core business strengths. We also took into account analyst's ratings and hedge fund sentiment.
10. Valero Energy Corporation (NYSE: VLO)
Number of Hedge Fund Holders: 41 Dividend Yield: 5%
Valero Energy Corporation (NYSE: VLO) is a manufacturer of transportation fuels and petrochemical products in the US and internationally. It operates through its Refining, Renewable Diesel, and Ethanol segments, and ranks 10th on our list of the best large cap dividend stocks to buy now.
This June, Barclays analyst Theresa Chen raised the price target on Valero Energy Corporation (NYSE: VLO) shares from $84 to $94, retaining the firm's Overweight rating on the company's shares.
In the first quarter of 2021, Valero Energy Corporation (NYSE: VLO) had an EPS of -$1.73, beating estimates by $0.12. The company's revenue was $20.81 billion, also beating estimates by $1.37 billion. Valero Energy Corporation (NYSE: VLO) has also gained 6.3% in the last 6 months and 12.27% year to date.
By the end of the first quarter of 2021, 41 hedge funds out of the 866 tracked by Insider Monkey held stakes in Valero Energy Corporation (NYSE: VLO) worth roughly $462 million. This is compared to 38 hedge funds in the previous quarter with stakes worth approximately $409 million.
Like AT&T Inc. (NYSE: T), Altria Group, Inc. (NYSE: MO), Mastercard Incorporation (NYSE: MA), and JPMorgan Chase & Co. (NYSE: JPM), Valero Energy Corporation (NYSE: VLO) is a good large-cap stock to invest in.
9. Chevron Corporation (NYSE: CVX)
Number of Hedge Fund Holders: 41 Dividend Yield: 5%
Chevron Corporation (NYSE: CVX) is an energy company operating in the integrated energy, chemicals, and petroleum operations sectors across the globe. It ranks 9th on our list of the best large cap dividend stocks to buy now.
This July, BMO Capital initiated coverage of Chevron Corporation (NYSE: CVX) shares with an Outperform rating and a $123 price target, indicating a 25% upside on the shares. Analyst Phillip Jungwirth made positive comments on Chevron Corporation's (NYSE: CVX) free cash flow profile and low dividend breakeven as well.
In the first quarter of 2021, Chevron Corporation (NYSE: CVX) had an EPS of $0.90, exceeding the previous quarter's -$0.01 EPS. The company's revenue was $32.03 billion, up 1.68% year over year and also surpassing the previous quarter's revenue of $25.25 billion. Chevron Corporation (NYSE: CVX) has also gained 4.91% in the last 6 months and 13.95% year to date.
By the end of the first quarter of 2021, 41 hedge funds out of the 866 tracked by Insider Monkey held stakes in Chevron Corporation (NYSE: CVX) worth roughly $4.86 billion. This is compared to 50 hedge funds in the previous quarter with stakes worth approximately $5.39 billion.
Like AT&T Inc. (NYSE: T), Altria Group, Inc. (NYSE: MO), Mastercard Incorporation (NYSE: MA), and JPMorgan Chase & Co. (NYSE: JPM), Chevron Corporation (NYSE: CVX) is a good large-cap stock to invest in.
ClearBridge Investments, an investment management firm, mentioned Chevron Corporation (NYSE: CVX) in its first-quarter 2021 investor letter. Here's what they said:
“While reducing in health care and consumer staples, we increased our exposure to high-quality names in economically sensitive areas of the market. We added to low-cost, high-quality energy names, (including) Chevron. We are positive on the company’s strong balance sheets, competitive positions and exposure to an economic recovery.”
8. The Progressive Corporation (NYSE: PGR)
Number of Hedge Fund Holders: 45 Dividend Yield: 0.43%
The Progressive Corporation (NYSE: PGR) is an insurance holding company that provides personal and commercial auto, personal residential and commercial property, general liability, and a range of related insurance products and services in the US. The company ranks 8th on our list of the best large cap stocks to buy now.
This July, The Progressive Corporation (NYSE: PGR) was added to the US 1 List at BofA, while in June, MKM Partners analyst Harry Fong retained his Buy rating and $125 price target on The Progressive Corporation (NYSE: PGR) shares.
In the second quarter of 2021, The Progressive Corporation (NYSE: PGR) had an EPS of $0.71, missing estimates by $0.34. The company's revenue was $11.48 billion, up 13.22% year over year and beating estimates by $150.80 million. The Progressive Corporation (NYSE: PGR) has also gained 0.17% in the last 6 months and 6.27% in the past year.
By the end of the first quarter of 2021, 45 hedge funds out of the 866 tracked by Insider Monkey held stakes in The Progressive Corporation (NYSE: PGR) worth roughly $1.21 billion. This is compared to 48 hedge funds in the previous quarter with stakes worth approximately $1.74 billion.
Like AT&T Inc. (NYSE: T), Altria Group, Inc. (NYSE: MO), Mastercard Incorporation (NYSE: MA), and JPMorgan Chase & Co. (NYSE: JPM), The Progressive Corporation (NYSE: PGR) is a good large-cap stock to invest in.
Wedgewood Partners, an investment management firm, mentioned The Progressive Corporation (NYSE: PGR) in its second-quarter 2021 investor letter. Here's what they said:
“Progressive continues to report double-digit growth in policies in force (PIF), having added nearly 750,000 personal automobile and commercial PIFs in the first quarter of 2021, compared to the Company’s closest competitor, GEICO (a subsidiary of Berkshire Hathaway), which added just 124,000 PIFs. However, Progressive’s loss ratio has been elevated over the past few months due to a large, unseasonal ice storm that affected the southwestern U.S. We expect the financial effects of this to be short-lived and that the Company’s core earnings power should continue compounding in-line with its growth in PIFs. Traditional financial businesses are historically and relatively out of favor, if only evidenced by their slim weightings in major U.S. benchmarks, but there are pockets of exceptional growth businesses, such as Progressive, where we are happy to be contrarians.”
7. Exxon Mobil Corporation (NYSE: XOM)
Number of Hedge Fund Holders: 65 Dividend Yield: 5.5%
Exxon Mobil Corporation (NYSE: XOM) is an energy company operating in the integrated oil and gas industry to produce crude oil and natural gas in the US and internationally. The company ranks 7th on our list of the best large cap dividend stocks to buy now.
This July, BMO Capital initiated coverage of Exxon Mobil Corporation (NYSE: XOM) shares with a Market Perform rating and a $69 price target set by analyst Phillip Jungwirth. The price target implies a 21% upside on the company's shares.
In the first quarter of 2021, Exxon Mobil Corporation (NYSE: XOM) had an EPS of $0.65, beating estimates by $0.05. The company's revenue was $59.15 billion, up 5.32% year over year and beating estimates by $2.89 billion. Exxon Mobil Corporation (NYSE: XOM) has also gained 16.32% in the last 6 months and 34.84% year to date.
By the end of the first quarter of 2021, 65 hedge funds out of the 866 tracked by Insider Monkey held stakes in Exxon Mobil Corporation (NYSE: XOM) worth roughly $2.77 billion. This is compared to 63 hedge funds in the previous quarter with stakes worth approximately $2.20 billion.
Like AT&T Inc. (NYSE: T), Altria Group, Inc. (NYSE: MO), Mastercard Incorporation (NYSE: MA), and JPMorgan Chase & Co. (NYSE: JPM), Exxon Mobil Corporation (NYSE: XOM) is a good large-cap stock to invest in.
6. Iron Mountain Incorporated (NYSE: IRM)
Number of Hedge Fund Holders: 16 Dividend Yield: 5.8%
Iron Mountain Incorporated (NYSE: IRM) is a leading REIT providing storage and information management services. The company ranks 6th on our list of the best large cap dividend stocks to buy now.
Wells Fargo has raised its price target on Iron Mountain Incorporated (NYSE: IRM) shares to $38 with an Overweight rating as of this February. Iron Mountain Incorporated (NYSE: IRM) has also raised its 2021 AFFO guidance to $3.28-$3.45 versus the consensus $2.66, while its revenue view has also been raised to $4.37 billion - $4.52 billion, versus the consensus $4.36 billion.
In the first quarter of 2021, Iron Mountain Incorporated (NYSE: IRM) had an FFO of $0.63, beating estimates by $0.07. The company's revenue was $1.08 billion, up 1.25% year over year and beating estimates by $15.51 million. Iron Mountain Incorporated (NYSE: IRM) has also gained 44.66% in the last 6 months and 52.79% year to date.
By the end of the first quarter of 2021, 16 hedge funds out of the 866 tracked by Insider Monkey held stakes in Iron Mountain Incorporated (NYSE: IRM) worth roughly $56.3 million. This is compared to 18 hedge funds in the previous quarter with stakes worth approximately $64.7 million.
Like AT&T Inc. (NYSE: T), Altria Group, Inc. (NYSE: MO), Mastercard Incorporation (NYSE: MA), and JPMorgan Chase & Co. (NYSE: JPM), Iron Mountain Incorporated (NYSE: IRM) is a good large-cap stock to invest in.
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Disclosure: None. 10 Best Large Cap Dividend Stocks to Buy Now is originally published on Insider Monkey.
