Blue-chip stocks are the gold standard in investing, known for their rock-solid stability and proven track record of success. These companies dominate their industries, consistently delivering strong revenue and earnings growth while maintaining a powerful market presence. With their ability to weather storms, and often provide reliable dividends, blue-chip stocks offer an appealing blend of growth and stability.
In light of this, Wells Fargo analysts have compiled a “Core” list of “blue chip, industry-leading companies.” According to analyst John Sheehan, the list focuses on high-quality companies with characteristics such as strong management teams, stable revenues, an impressive return on invested capital, a strong balance sheet, and minimal stock price volatility. These traits make them prime candidates for investors looking for reliable, long-term opportunities.
The companies on this list have also demonstrated an average dividend increase of 7.7% over the past 12 months, highlighting their commitment to rewarding shareholders. Keeping this in mind, here’s a closer look at three names that earned their spot on this list.
Dividend Stock #1: Oracle
Oracle Corporation (ORCL) is a global leader in enterprise-grade database, middleware, and application software, but its push into cloud computing is what truly sets it apart. With a suite of cloud solutions built on industry standards like SQL, Java, and HTML5, Oracle Cloud empowers businesses to manage and build diverse cloud deployment models through subscription-based services.
From its Oracle Database and Fusion Middleware to cutting-edge products like Exadata Database Machine and Big Data Appliance, Oracle’s portfolio delivers everything from application and platform services to advanced cloud management via Oracle Enterprise Manager, positioning it as a powerhouse in the tech landscape.
Commanding a market cap of around $483.4 billion, shares of this software giant have rallied 60.3% over the past year, outperforming the broader S&P 500 Index’s ($SPX) 32.8% return over the same time frame. Plus, in 2024 alone, the stock is up 66.7%, easily outshining the SPX’s 21.9% gain on a YTD basis.
Apart from its focus on growth, the tech giant remains dedicated to its investors, which is evident from its nearly decade-long streak of dividend increases. The company announced a quarterly dividend of $0.40 per share alongside its fiscal 2025 Q1 earnings results on Sept. 9. This brings its annualized dividend to $1.60 per share, translating to a modest 0.92% yield.
By maintaining a health payout ratio of 33.13%, Oracle strikes a balance between fueling growth and delivering solid returns to shareholders. After the company’s strong Q1 earnings release, which blew past Wall Street’s top- and bottom-line estimates, shares of Oracle rose more than 11% on Sept. 10. The company reported total revenue of $13.3 billion, marking a 7% year-over-year increase, driven by an exceptional 21% growth in Cloud services revenue.
On an adjusted basis, Oracle's earnings reached $1.39 per share, reflecting a robust 17% increase from the previous year and surpassing forecasts by 4.3%. As of Aug. 31, Oracle reported an operating cash flow of $19.1 billion and a free cash flow of $11.3 billion.
CEO Safra Catz highlighted that with a record contract backlog of $99 billion, driven by a 53% year-over-year increase in remaining performance obligations (RPO), Oracle is poised for robust revenue growth throughout fiscal year 2025. Plus, Larry Ellison, Oracle's CTO, revealed that in Q1 alone, the company secured 42 new cloud GPU contracts totaling $3 billion.
For Q2, management is forecasting an impressive 8% to 10% revenue growth fueled by its booming cloud business. Cloud revenue is expected to skyrocket by 24% to 26%. Adjusted EPS is projected to land between $1.45 and $1.49. For fiscal 2025, Oracle is aiming for double-digit total revenue growth, with cloud infrastructure revenue expected to outpace last year’s performance.
Analysts tracking Oracle expect the company’s profit to increase 8.2% year over year to $5.00 per share in fiscal 2025, and jump another 15% to $5.75 per share in fiscal 2026.
ORCL stock has a consensus “Moderate Buy” rating overall. Out of the 29 analysts offering recommendations for the stock, 18 suggest a “Strong Buy,” and the remaining 11 maintain a “Hold” rating.
The average analyst price target of $178.04 indicates a marginal potential upside from the current price levels. However, the Street-high price target of $210 suggests that ORCL could rally as much as 19.5%.
Dividend Stock #2: Mastercard Incorporated
New York-based Mastercard Incorporated (MA) is a global tech leader in the electronic payments industry, driving a more inclusive and digital economy. The company offers branded and licensed credit and debit cards and related services, as well as mobile, web, and contactless payment services, from marketing to authorization, clearing, and settling.
With a presence in over 210 countries, and valued at around $462.9 billion by market cap, shares of this payment solutions giant are up roughly 25.6% over the past year and 17.8% on a YTD basis.
Mastercard has an impressive 13-year streak of consecutive dividend hikes. On Sept. 16, the company announced a quarterly dividend of $0.66 per share, set to be distributed to its shareholders on Nov. 8. Its annualized dividend of $2.64 per share translates to a 0.53% yield. Furthermore, Mastercard's conservative payout ratio of just 18.15% provides plenty of room for future dividend growth.
In addition to returning $615 million to investors in dividends, Mastercard bought back $2.6 billion worth of shares in Q2.
Shares of Mastercard soared 3.6% after its stronger-than-expected Q2 earnings results on July 31. The company reported net revenue of approximately $7 billion, marking an 11% annual jump. Mastercard’s earnings, on an adjusted basis, grew by a notable 24.2% year-over-year, reaching $3.59 per share.
CEO Michael Miebach noted that the strong Q2 performance was driven by healthy consumer spending and a 17% surge in cross-border volume. Demand for the company’s value-added services and solutions also contributed significantly. As of June 30, Mastercard's impressive customer base had issued a staggering 3.4 billion Mastercard and Maestro-branded cards.
For Q3, Mastercard anticipates year-over-year net revenue growth at the upper end of a low double-digit range on a currency-neutral basis, with minimal impact from acquisitions. For the full year, Mastercard expects net revenue growth at the high end of a low double-digit range.
Analysts tracking Mastercard project the company’s bottom line to climb 16.6% year over year to $14.30 per share in fiscal 2024 and rise another 16% to $16.59 per share in fiscal 2025.
MA stock has a consensus “Strong Buy” rating overall. Of the 38 analysts covering the stock, 31 suggest a “Strong Buy,” two recommend a “Moderate Buy,” and the remaining five give a “Hold” rating.
The average analyst price target of $524.92 indicates a potential upside of 4.5% from the current price levels. However, the Street-high price target of $591 suggests that MA could rally as much as 17.7%.
Dividend Stock #3: The Coca-Cola Company
Founded in 1886, Atlanta-based The Coca-Cola Company (KO) is a global beverage powerhouse, quenching the thirst of consumers in over 200 countries. With a diverse portfolio of billion-dollar brands like Coca-Cola, Sprite, Fanta, Dasani, and Powerade, the company leads in sparkling soft drinks, water, sports drinks, coffee, tea, and more.
Coca-Cola is focused on reducing sugar, launching innovative products, and driving sustainability through water replenishment, recycling, and cutting carbon emissions. With a market cap of around $298.3 billion, shares of this soft drink giant are up 29.5% over the past 52 weeks and 18% on a YTD basis.
On Oct. 1, the beverage giant paid its shareholders a quarterly dividend of $0.485 per share. This brings its annualized dividend to $1.94 per share, offering a 2.77% yield. With a remarkable 62 years of consecutive dividend increases and a notable payout ratio of 67.58%, Coca-Cola stands out as a reliable Dividend King.
The company reported its Q2 earnings results on July 23, which beat Wall Street’s expectations. Coca-Cola's net sales climbed 3% to $12.4 billion, while organic revenue, excluding acquisitions, divestitures, and currency impacts, surged by 15%. Global unit case volume increased by 2%, driven by strong demand in international markets. Adjusted EPS grew by 7% to $0.84, and KO generated $3.3 billion in free cash flow.
Coke also raised its guidance. For fiscal 2024, management now projects organic revenue growth of 9% to 10%, driven by robust operating performance and pricing strategies to combat inflation. The company forecasts adjusted comparable EPS to increase by 5% to 6%. Additionally, management anticipates generating $9.2 billion in free cash flow.
Analysts tracking Coca-Cola forecast the company’s profit to climb 6% year over year to $2.85 per share in fiscal 2024, and rise another 6.3% to $3.03 per share in fiscal 2025. The company is slated to report its Q3 earnings results before the opening bell on Wednesday, Oct. 23.
Overall, Wall Street is highly optimistic, with a consensus “Strong Buy” rating for KO stock. Of the 21 analysts covering the stock, 15 advise a “Strong Buy,” one suggests a “Moderate Buy,” and the remaining five recommend a “Hold.”
The average analyst price target of $73.28 indicates expected upside of 5.3% from the current price levels. However, the Street-high price target of $85 suggests that KO could rally as much as 22.1% from here.
On the date of publication, Anushka Mukherji did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
