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7 Mega-Cap Stocks to Buy That Have Stable Dividends

This is no longer our grandparents’ or even parents’ stock market. High valuations have become the norm in an investing world dominated by retail traders. But when market volatility is high and economic uncertainty is on the rise, your best bet is to invest in mega-cap stocks.

Why? Well, although there are no guarantees in the stock market, you can rest easy when you have invested in a large enterprise. That’s because they offer strong price momentum, excellent dividends and a stable long-term outlook.

So, with that in mind, this list will provide seven mega-cap stocks that offer all these things and more. During times like these, it cannot hurt to fireproof your portfolio with these kinds of mature companies.

Yes, these investments might not result in triple-digit gains. But you will rarely have headaches or sleepless nights when investing in mega-cap stocks.

Fifth Third Bancorp (NASDAQ:FITB) Realty Income (NYSE:O) McDonald’s (NYSE:MCD) Automatic Data Processing (NASDAQ:ADP) Goldman Sachs (NYSE:GS) Disney (NYSE:DIS) Lowe’s (NYSE:LOW)

Mega-Cap Stocks to Buy: Fifth Third Bancorp (FITB) Fifth Third Bank sign on brick buildingSource: Susan Montgomery / Shutterstock.com

Trailing 12-month (TTM) dividend yield: 2.84%

A $26 billion midwestern and mid-Atlantic bank, Fifth Third Bancorp is one of the best dividend-paying mega-cap stocks out there. Headquartered in Cincinnati, this company has over $200 billion in assets and is one of the largest locally based banks in the United States.

Due to its impressive scale, the bank managed quite well during the novel coronavirus pandemic. According to CNBC data, Fifth Third has beat earnings estimates for the last four quarters.

Most recently, Fifth Third Bancorp’s second-quarter earnings more than quadrupled from the year-ago period, which was smack dab during the middle of the pandemic. That handily outpaced analysts’ estimates. Moreover, the company earned 94 cents per share, up significantly from just 23 cents in Q2 2020. FITB also forecasts full-year fee income to jump from 2020 while net interest income should dip slightly. Commenting on the results, CEO Greg Carmichael said the following:

“We are well-positioned to benefit when interest rates rise and well-hedged if rates remain at low levels for several more years.”

Fifth Third plans to hike its quarterly distribution by 3 cents per share in September. For more than ten years, the company has lifted the FITB stock dividend consistently as well.

Realty Income (O) realty income (O) logo highlighted by a magnifying glass on a web browserSource: Shutterstock

TTM dividend yield: 3.96%

Next up on this list of mega-cap stocks is Realty Income. Real estate investment trusts (REITs) are always a favorite of income investors due to the 90% rule. According to the U.S. Securities and Exchange Commission (SEC), “To qualify as a REIT, a company must have the bulk of its assets and income connected to real estate investment and must distribute at least 90 percent of its taxable income to shareholders annually in the form of dividends.”

However, every REIT is different due to the property type in which they invest. The sole exceptions are diversified and specialty REITs, which may hold different types of properties in their portfolios. That said, Realty Income “focuses on acquiring freestanding, single-client properties under long-term, net lease agreements.”

Due to its diversified strategy, the company was able to weather the novel coronavirus pandemic quite well. In fact, this company’s top tenants include health clubs like LA Fitness and Lifestyle Fitness and movie-theater chains like AMC Entertainment (NYSE:AMC). That’s a testament to Realty Income’s resilience — it maintained dividend hikes while surviving a particularly awful time in its history.

As of this writing, Realty Income has made 614 consecutive monthly dividend payments. Now, with the economy whirring back to life, the chances of O stock’s streak being broken are close to zero.

Mega-Cap Stocks to Buy: McDonald’s (MCD) MCD Stock: a McDonald's sign and logo on the side of a buildingSource: 8th.creator / Shutterstock.com

TTM dividend yield: 2.14%

While MCD stock has done well over the years, it often gets lost in the shuffle because of heavy hitters like Tesla (NASDAQ:TSLA) and Nio (NYSE:NIO).

Nevertheless, taking McDonald’s lightly would be a huge folly. Over the last year, the fast-food giant did reasonably well due to its existing drive-thru capability and enhanced delivery options. Revenue at MCD dropped about 9% last year and earnings slipped over 20%.

Considering the impact of the pandemic, these statistics are very respectable. Plus, most recently, the fast-food giant topped Wall Street’s estimates in reporting its Q2 earnings and revenue. According to CNBC, “U.S. same-store sales climbed 25.9% in the quarter and 14.9% on a two-year basis.”

According to the company, these strong sales are because of its new chicken sandwich and promotional campaign with a K-pop group called BTS. The fast-food giant reported a net income of $2.22 billion, or $2.95 per share, up from $483.8 million or 65 cents per share in the prior year. MCD also raised its full-year forecast, now expecting “systemwide sales growth in the mid-to-high teens.” For Q3, the company predicts same-store sales growth in its five largest global markets to beat 2019 levels as well.

For more than ten years, this company has also hiked its dividend consecutively. True, at 57.13%, the payout ratio might seem high. But this is McDonald’s we are talking about. It’s not like this pick of the mega-cap stocks will run out of cash anytime soon.

Automatic Data Processing (ADP) calculator, pen, paper and a binder that says "payroll" on the sideSource: Shutterstock

TTM dividend yield: 1.75%

Next up on this list of mega-cap stocks, Automatic Data Processing is a payroll processor that also offers other human resources services. The company was founded in 1949 and is headquartered in New Jersey.

This company is one of the best large-cap dividend stocks out there; ADP has a five-year dividend growth rate of 12.89%. It also has an enviable record of increasing its annual distribution consecutively over the last ten years.

Despite a tough year, ADP managed quite well during the pandemic. In fiscal 2020, net earnings rose by about 8% and revenue increased by 3%. However, these numbers are muted compared to the year-ago period. The wild swings in employment rates undoubtedly impacted how many payrolls and other programs the company could offer its customers.

That said, the last four quarters highlight how the recovery has greatly aided ADP stock. This company has beat expectations every time and, although the year-over-year (YOY) comparisons aren’t flattering due to Covid-19, the numbers are still impressive.

This name’s payout ratio is a bit high at 56.12%. But that should not be a problem, considering a stronger job market in 2021. That should help ADP expand its distribution once more.

Mega-Cap Stocks to Buy: Goldman Sachs (GS) The Goldman Sachs (GS) logo is displayed on a smartphone in front of a multi-color background.Source: Volodymyr Plysiuk / Shutterstock.com

TTM dividend yield: 1.25%

In comparison to sectors like tech and pharmaceuticals, financial stocks struggled during the pandemic due to falling interest rates and concerns surrounding the China-U.S. trade war. Against this backdrop, the nearly 100% one-year return achieved by Goldman Sachs is particularly impressive. Investors have awarded the bank handsomely for surpassing analysts’ earnings estimates for four straight quarters.

Now, you might be asking yourself if this is the best time to invest in GS stock. After performing exceedingly well in the last several quarters, the company is riding high and the price momentum is solid.

However, even though shares have appreciated handsomely in the last year, GS stock still trades at just 2.34 times forward price-to-sales. Plus, over the last three months, the stock has only gained 10.7%. So, there is a definite slowdown in momentum.

Tipranks tracks 11 analysts offering 12-month price targets on Goldman Sachs. The average price target is $429 per share, representing upside of around 5% from the current price. That’s not a lot, but it’s still enough to entice you to invest in this mature financial pick of the mega-cap stocks.

Disney (DIS) Walt Disney (DIS) logo on mobile phone with Cinderella's castile in backgroundSource: nikkimeel / Shutterstock.com

TTM dividend yield: N/A

Disney is a name that needs no introduction. A very mature business enterprise with multiple business lines, this entertainment conglomerate was able to do quite well during the pandemic despite the impact on its theme parks, cruise ships and cinema attendance. One of the main reasons DIS stock has done so well is its Disney+ streaming service, which has already surpassed 100 million subscribers.

This company has aggressively made inroads in the streaming space with Disney+, ESPN+ and Hulu. Moreover, although streaming is crowded, the company’s extensive content library is one of the best in the business. And Disney has no plans of stopping anytime soon.

Disney plans to distribute more than 100 new titles every year on Disney+ and is committed to spending $14 billion to $16 billion annually on streaming content across its services within the next four years. Plus, with the economy restarting, the more traditional business lines behind this pick of the mega-cap stocks will also start to move the needle.

All in all, this is an excellent time to invest in DIS stock.

Mega-Cap Stocks to Buy: Lowe’s (LOW) the front of a Lowe's storeSource: Helen89 / Shutterstock.com

TTM dividend yield: 1.26%

Last up on this list of mega-cap stocks is LOW stock. Home improvement retailer Lowe’s did very well in terms of sales during the pandemic. With millions of Americans stuck at home, people had little to do but invest time, money and effort into DIY home improvement projects. This is a trend that will continue until at least the end of 2021. That’s why this company’s last four quarters have seen such strong numbers.

More recently, Lowe’s handily surpassed estimates for fiscal Q2 earnings and also raised its sales forecast. Profits rose to $3 billion, or $4.25 per share. That was up from $2.8 billion, or $3.74 per share, in the year-ago period. Additionally, net sales jumped to $27.6 billion, up from $27.3 billion last year.

This year, the home improvement retailer forecasts $92 billion in revenue. Now, CEO Marvin Ellison believes the outsized growth Lowe’s saw during the pandemic will continue as people keep spending on their homes while also managing other priorities. Ellison said the following:

“[T]he pandemic has created a long-term impact of the home’s importance and we just don’t see the changing.”

Considering these positive developments, this home improvement retailer should maintain its streak of dividend hikes.

On the date of publication, Faizan Farooque did not have (either directly or indirectly) any positions in any of the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Faizan Farooque is a contributing author for InvestorPlace.com and numerous other financial sites. Faizan has several years of experience analyzing the stock market and was a former data journalist at S&P Global Market Intelligence. His passion is to help the average investor make more informed decisions regarding their portfolio.

7 Strong Mega-Cap Stocks to Snap Up For Dividends and Growth

Though the stock market continues to ride high in 2021, the meatiest headlines have been made by growth stocks and exciting meme plays. While triple-digit gains have been made, these riskier picks. And investors cannot afford to get complacent. So, a case can be made for investing in mega-cap stocks in the current economic climate.

One of the easiest ways to fireproof your portfolio is to invest in mega-cap stocks dominating their respective markets. Yes, the price momentum of these mature companies with large market capitalizations does not compare favorably with the likes of Tesla (NASDAQ:TSLA) or Robinhood (NASDAQ:HOOD). But they will continue to pay dividends to their shareholders and progress at a nice pace because of their established positions.

Here are seven mega-cap stocks that are solid investments that will provide you with comfort when market volatility is high and economic uncertainty is on the rise:

Morgan Stanley (NYSE:MS) Alibaba (NYSE:BABA) PayPal (NASDAQ:PYPL) Microsoft (NASDAQ:MSFT) Mastercard (NYSE:MA) JPMorgan Chase (NYSE:JPM) UnitedHealth (NYSE:UNH)

Investors in these stocks can look forward to healthy dividends and stock growth besides. Let’s dive in.

Mega-Cap Stocks to Buy: Morgan Stanley (MS) The logo for Morgan Stanley is displayed on the side of a building.Source: Ken Wolter / Shutterstock.com

The novel coronavirus pandemic wreaked havoc on lower-income Americans but didn’t seem to impact the finances of ultra-high net worth individuals and institutions very much at all. For example, investment banking giant Morgan Stanley had about $4 trillion of client assets and nearly 70,000 employees at the end of 2020.

Full-year net revenues climbed to a record $48.2 billion compared to $41.4 billion a year ago. Net income was $11 billion ($6.46 per diluted share) versus $9 billion ($5.19 per diluted share) a year ago.

The bank’s strength has traditionally been its equities-trading franchise — the biggest in the world. That segment had yet another great year: equity sales and  net trading revenues increased 22% year on year.

In mid-July, the investment bank reported another stellar quarter, reporting net revenues of $14.8 billion compared with $13.7 billion a year ago. EPS of $1.85 a share handily beat the consensus estimate of $1.65 estimate per share.

Morgan Stanley’s equities trading once again topped estimates handsomely, producing $2.83 billion in revenue to beat analyst estimates by $400 million. Its two other significant divisions, wealth management and investment management, also surpassed expectations.

One other important area to consider when investing in MS stock is its dividend. The banking colossus has hiked its distribution for seven consecutive years, with a three-year growth rate of 32.6%. That’s a very healthy payout to go along with steady upward price momentum.

Alibaba (BABA) Alibaba Group (BABA) headquarters sign located in Hangzhou ChinaSource: Kevin Chen Photography / Shutterstock.com

Alibaba is the world’s largest online retail website. In the fiscal year ended March 31, 2021, annual gross merchandise volume (GMV) transacted on Alibaba’s e-commerce market places in China reached approximately 7.49 trillion yuan. Alibaba’s revenue subsequently grew in the June quarter by 22%. Plus the company’s retail operations grew by 14% and cloud revenues were up 29%.

But it has been a challenging year for BABA stock. Shares of the e-commerce giant are down 10.8% in the last month as Chinese regulatory activity takes a steep toll on the stock.

Two events are of particular importance. Last November, Chinese regulators halted the initial public offering of Ant Group, the operator of the Alipay mobile payment service and Alibaba Group’s sister company.

Ant Group was poised to raise $35 billion in the world’s largest-ever IPO. On the bright side, according to a member of the board of directors, it will “not be too long” before Ant Group can resume its suspended IPO.

The other big regulatory development was a $2.8 billion fine levied against the Chinese tech giant for antitrust violations, leading to a net loss in the March quarter of 5.47 billion yuan, its first operating loss as a public company.

Overall though, BABA remains a very strong enterprise. My colleague Dana Blankenhorn does a great job explaining how omnipresent the Jack Ma-founded company is in China in an insightful article. You are essentially dealing with Amazon (NASDAQ:AMZN), Microsoft and MasterCard rolled into one.

Yes, the regulatory activity in China, much like the U.S. and Europe, will ramp up. But considering its size and strength, any dips are a massive buying opportunity.

PayPal (PYPL) PayPal (PYPL) logo overlays daylight photo of corporate buildingSource: JHVEPhoto / Shutterstock.com

PayPal provides electronic payment solutions to merchants and consumers, with a focus on online transactions. In 2020, PayPal’s total payment volume or TPV grew by around one-third year-on-year, as the digital payment provider increased exponentially during the novel coronavirus pandemic.

However, the San Jose, California-based company recently missed second quarter revenue estimates amid former parent eBay (NASDAQ:EBAY) switching to another payment processor. As a result, the stock dipped, providing you with a great opportunity to invest in this one.

At the end of 2020, PayPal had 377 million active accounts, including 29 million merchant accounts. It also owns Xoom, an international money transfer business and Venmo, a person-to-person payment platform, both of which are doing exceedingly well.

And despite the tough quarterly results, there is plenty to smile about if you are a PayPal stockholder. The company added 11.4 million new active accounts in the second quarter for a total of 403 million active accounts.

Revenue grew 19% year over year in the quarter that ended June 30. Total payment volume jumped 40% to $311 billion, while the Venmo app, which started supporting cryptocurrency services in April, saw payment volume jump 58% to $58 billion.

Compared to several mega-cap stocks, PYPL has excellent price momentum behind it.

Microsoft (MSFT) Image of corporate building with Microsoft (MSFT) logo above the entrance.Source: NYCStock / Shutterstock.com

The original darling of the dot com bubble remains a very strong name in the tech world. Microsoft doesn’t grab as many headlines as it used to, but this is a tech giant that has grown exponentially in the last five years. And it has diversified its business into several segments with robust recurring revenues.

Microsoft recently reported Q4 FY 2021 earnings, once again handily beating expectations. Adjusted EPS rose 48.6% over the year-ago period and revenue surpassed analyst estimates, up 21.3% compared to the year-ago quarter.

Microsoft’s Azure cloud revenue jumped 51% year-over-year, exceeding expectations. The platform now has a roughly 20% share of the $150 billion global cloud market as of the end of Q1 2021. second only to Amazon Web Services in terms of global cloud market share.

The Azure cloud platform is more than 200 products and services, a suite of tools and services developers can use for networking, storage, mobile and web application services, artificial intelligence (AI), Internet of Things (IoT) and other computing needs. Azure is key to Microsoft’s future, with recession-proof revenue streams and stable recurring fees.

 

Overall, with three broad divisions, including diverse businesses such as legacy Microsoft Office, SQL Server, Skype and LinkedIn, there is hardly any facet of your life that doesn’t connect with an MSFT product.

Mastercard (MA) A close-up shot of Mastercard (MA) credit or debit cards.Source: Alexander Yakimov / Shutterstock.com

Mastercard has rewarded investors handsomely over the years. The stock has outperformed the S&P 500 by 177.1% and its sector by 190.2% in the past five years on a dividend-adjusted basis.

But lately, all the headlines are reserved for PayPal, an excellent stock in its own merits. MA won’t grow nearly as fast as PayPal. However, Mastercard is also an interesting way to play the growing digital payment trend. As things get back to normal, people will start traveling more and cross-border card transactions will increase, benefitting Mastercard massively.

Most recently, Mastercard surpassed sales and earnings estimates for the second quarter. The company reported $4.5 billion in revenues, beating estimates by 3.7%. EPS of $2.08 a share also beat the $1.74 expected by Wall Street analysts.

International transactions, Mastercard’s bread and butter, rose 33% in local currency from the June 2020 quarter. This was due to a strong increase in domestic card spending and gains in cross-border purchases as countries reopen for travel and business.

PayPal won’t see the same tailwinds because it is doesn’t benefit the same way from pent-up travel demand. It makes MA a slightly better reopening play in my eyes.

JPMorgan Chase (JPM) A sign for JP Morgan Chase & Co (JPM).Source: Bjorn Bakstad / Shutterstock.com

Although banks had a rough 2020, some fared better than others.

America’s biggest bank, JPMorgan, reported net revenue of $29.2 billion and $29.1 billion for the fourth and third quarters of 2020. Considering the steep fall in interest rates and the overall depressed economic atmosphere, these are excellent numbers.

More recently, the banking giant posted a 155% jump in second-quarter profits as the U.S. economy continued to rebound.

Trading revenue fell 28% from last year’s record-breaking levels. But a surge in deal-making and the release of $3 billion set aside to cover feared pandemic losses more than made up for it.

Looking ahead, the country’s largest bank offered a muted outlook. It warned that low-interest rates, weak loan demand and a slowdown in trading will weigh down results in the forthcoming quarters.

“We have bright spots in certain pockets and the consumer spend trends are encouraging,” Chief Financial Officer Jeremy Barnum spoke on a call.

However, he warned that corporate clients and consumers have a lot of cash at their disposal due to substantial stimulus funds and low interest rates. Hence, core lending revenues might not benefit this year from the broader recovery.

Nevertheless, JPMorgan is a bellwether for the U.S. economy. As consumer spending comes roaring back to life, JPM is a safe stock to have in your portfolio.

UnitedHealth Group (UNH) The UnitedHealth (UNH) headquarters in Minnetonka, Minnesota.Source: Ken Wolter / Shutterstock.com

UnitedHealth Group is a data-driven healthcare enterprise comprised of Optum, its pharmacy and care delivery division, and UnitedHealth, the nation’s largest health insurer. Overall, the group oversees 140 million patients who produce approximately 1.5 trillion transactions per year. That is a big data pool, which is leveraged to improve medical care.

For instance, the company immediately rescheduled 4,000 appointments to virtual telemedicine visits at the pandemic’s start. As soon as trends emerge, Optum analyses them and acts on the newly emerged patterns. This gives it an edge over more traditional companies and platforms.

Over the last five years, the tech-focused healthcare company has seen earnings increase by 18.8%, while sales jumped 9.0%. For more than ten years, the company has hiked the dividend consistently; the distribution has grown by 24.5% during this time.

In summary, UnitedHealth is an asset-light business. It pays a handsome dividend and has grown exponentially in the last five years. If you want a great defensive pick for your portfolio, look no further.

On the publication date, Faizan Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Faizan Farooque is a contributing author for InvestorPlace.com and numerous other financial sites. Faizan has several years of experience analyzing the stock market and was a former data journalist at S&P Global Market Intelligence. His passion is to help the average investor make more informed decisions regarding their portfolio.