I’d Double a Position in These 3 Dividend Stocks Right Now Without Any Hesitation
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I’d Double a Position in These 3 Dividend Stocks Right Now Without Any Hesitation
08 mins
With the stock market trading sideways since the start of summer, concerns are running high about a possible near-term downturn. Rather than exiting the market, consider leaning into defensive names.
Blue chip dividend stocks are a prime example. These durable, high-quality businesses provide steady cash payouts each quarter, all while leaving the door open for long-term price appreciation.
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Among dividend stocks in this category, a few stand out as strong opportunities right now: AbbVie (NYSE: ABBV), Chevron (NYSE: CVX), and PepsiCo (NASDAQ: PEP).
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AbbVie’s comeback points to further dividend growth
Pharmaceutical company AbbVie has raised its dividend annually since being spun off from Abbott Laboratories in 2013. A few years ago, the company entered a rough patch due to the then-pending expiration of patent exclusivity for its Humira anti-inflammatory treatment.
However, thanks to the success of immunology therapies like Skyrizi and Rinvoq, AbbVie has experienced a rebound. Sales growth and operating income have bounced back. After making a further pivot toward immunology, through its pending acquisition of Apogee Therapeutics, AbbVie appears well-positioned for further earnings growth. Forecasts call for revenue and earnings growth of around 10% and 40%, respectively, during 2026.
As earnings growth continues, AbbVie remains well-positioned to continue its dividend growth streak. Currently, the stock has a forward dividend yield of around 2.75%, with annual dividend growth averaging nearly 6% over the past five years.
Chevron remains a Dividend King in the making
Integrated oil and gas company Chevron has nearly 40 years of consecutive dividend growth. That means it’s just a little over a decade away from attaining Dividend King status. Dividend Kings are stocks with 50 or more years of consecutive dividend growth.
With a forward dividend yield of around 3.75%, Chevron has also raised its dividend by an average of 6% over the past five years. An additional wave of mid-single-digit dividend growth may be in the cards. Even as crude oil prices have eased since the geopolitically driven supply shocks earlier this year, they remain within a range that supports the energy company’s long-term cash flow growth goals.
As announced last November, Chevron’s game plan to “maintain capital and cost discipline” could lead to 10% annualized earnings growth between now and 2030 if Brent crude oil prices stay above $70 per barrel. Alongside cost-cutting measures, Chevron’s game plan also entails leaning into growth opportunities, such as providing power solutions for artificial intelligence (AI) data centers.
PepsiCo: A contrarian buy among dividend stocks
PepsiCo shares have fallen out of favor in recent months. The packaged food and beverage company continues to struggle with declining U.S. market share, even as quarterly results beat forecasts.
Yet while the market remained bearish, much suggests ample rewards for those going contrarian at present price levels. Right now, the stock has a forward dividend yield of around 4.4%. PepsiCo is already a Dividend King, with a 54-year track record of annual dividend increases, and the company’s dividend growth has averaged around 6% annually over the past five years.
As Morgan Stanley‘s Dara Mohsenian recently noted, factors like tariff refunds and continued strong international results could help offset recent concerns. Since PepsiCo’s shares are trading for only 18 times forward earnings, while competitor Coca-Cola trades for 25 times forward earnings, there’s ample upside potential if sentiment improves.
Should you buy stock in AbbVie right now?
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Thomas Niel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends AbbVie and Chevron. The Motley Fool has a disclosure policy.
