By 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.
As you can see in the chart, McDonald’s sales have rebounded from their pandemic lows, and the company has grown margins, indicating it has plenty of room to lower prices if needed, or extend promotions like its $5 meal deal.
With McDonald’s, it seems that investors are taking an ultra-long-term view on the stock and looking at where the company will be at least a year from now, rather than where it is today.
Another catalyst that could be driving the stock’s move higher is China. China recently announced a stimulus package aimed at driving economic growth and boosting consumer spending. Given its presence in the country, a potentially stronger Chinese economy is great news for McDonald’s.
McDonald’s isn’t the screaming buy it was a few months ago, but it still stands out as a worthwhile dividend stock to buy now. McDonald’s recently raised its dividend by 6% to $1.77 per quarter, or $7.08 per year — representing a forward yield of 2.3%. That’s not a bad passive income source, when you consider that the S&P 500 yields just 1.3%.
3 reasonable buys for long-term investors
Coca-Cola, Home Depot, and McDonald’s are three phenomenal businesses that were bargains but have undergone significant run-ups in their stock prices in a relatively short period. Any time a stock makes a big move based on expectations, it pressures the company to deliver or face a pullback in its stock price.
While all three companies aren’t as good a deal as they were earlier in the year, they aren’t necessarily overpriced for investors looking for blue chip dividend stocks. In fact, they are the exact kind of companies investors can count on to persevere through a recession.
If you’re willing to invest in quality, it might be wise to closely evaluate all three stocks, keeping in mind that the current rally could cool off soon.
Should you invest $1,000 in Coca-Cola right now?
Before you buy stock in Coca-Cola, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Coca-Cola wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $765,523!*
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.
See the 10 stocks »
*Stock Advisor returns as of September 30, 2024
Daniel Foelber has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Home Depot and Nvidia. The Motley Fool has a disclosure policy.
Coca-Cola and These 2 Red-Hot Dow Dividend Stocks Are Up 10% to 22% in 3 Months, and They Could Still Be Worth Buying in October was originally published by The Motley Fool
