4 blue chip dividend stocks with 7%+ yields to buy

Investing in good quality dividend stocks is always a good thing, especially among retirees and income-focused investors. These days, however, there are concerns about the need for these assets as higher interest rates push the risk-free rate to over 4%. 

Money market funds are yielding over 5%. Therefore, with inflation sitting at 3.3%, it means that investing in these funds will attract a small return. Still, I believe that investing in quality companies that have a higher dividend yield makes sense.

For starters, dividend yield is calculated by taking the annual dividend payout, dividing it with the share price, and multiplying by 100%. As such, stocks with a higher share price tend to have a smaller yield.

Energy Transfer

Energy Transfer (NYSE: ET) is one of my favourite dividend stocks, as I wrote here. The company operates one of the biggest energy transportation networks in the United States.

Energy Transfers has stable revenues, is high profitable, and has room for growing its dividend payouts. Its ongoing acquisition of Crestwood will expand its network and boost its profitability.

Energy Transfer has an attractive forward dividend yield of 9.15%. This payout is relatively stable especially now that energy prices have stabilised. 

Most importantly, Energy Transfer uses the MLP business model, meaning it is taxed as a partnership and not corporation. The latter pay corporate taxes and shareholders pay their personal taxes. 

Enterprise Products Partners 

Enterprise Products Partners (NYSE: EPD) is another partnership in the energy sector. It has a forward dividend yield of 7.49% and a healthy payout ratio of 78.45%. Crucially, the company has had 24 years of consecutive dividend growth, meaning it will soon become a dividend aristocrat.

Like Energy Transfer, EPD is a major transporter of crude oil and natural gas in the United States. It is also reasonably valued, with a trailing and PE multiples of just 10. EPD is a good company that will continue doing well in the coming years.

Altria 

Altria (NYSE: MO) is one of the few dividend kings in the market today after it raised its dividends for 53 consecutive years. The company has a dividend yield of 8.45% and a forward one of 8.81%.

Altria’s investors have also seen the value of their shares rise this year. They have jumped by more than 18% from the lowest level in 2022. 

Altria exists in an unloved corner of the market because its cigarettes are known to cause cancer. While the number of smokers are not growing as fast, the company has managed to compensate this by high prices. As such, its sales growth over time are between 2% and 3%.

Altria has made some mistakes in the past, especially its investment in Juul. Despite this, I believe that it is a good dividend company to have in your portfolio.

AT&T

AT&T (T) has been one of the biggest disappointments in corporate America. For dividend investors, it disappointed them by slashing their payouts in 2022. The management was also not punished for its disastrous buyout of Time Warner and Dish. It also faces a huge liability burden for the lead cables.

Despite these woes, AT&T seems to be fixing its business. It has reduced its debt load substantially. Analysts see its debt coming to $100 billion in the next few years. 

I suspect that AT&T will not have any meaningful revenue growth in the future. However, for dividend investors, I think the company can keep them coming for a while.