If I could only buy five stocks in the Vanguard Value ETF through 2025, I’d pick these three high-yield Blue-Chip Dividend stocks and these two Top Tech stocks
With net assets of $186 billion and an expense ratio of just 0.04%, the Vanguard Value ETF(NYSEMKT: VTV) is one of the largest low-cost Exchange Traded Funds (ETFs) available. The fund has a minimum investment of just $1, so it’s easy to build a position incrementally over time. The ETF includes 336 positions across various sectors and has a yield of 2.3%, which is higher than the ETF’s 1.3% yield. Vanguard S&P 500 ETF.
The ETF remains an excellent way to invest passively in top value stocks. Some investors may prefer to increase their exposure to the fund’s exceptional investment opportunities.
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If I could buy just five of the hundreds of stocks in the Vanguard Value ETF through 2025, I’d be for Coca-cola(NYSE: KO), PepsiCo(NASDAQ: PEP)And Chevron(NYSE: CVX) for passive income, and Broadcom(NASDAQ:AVGO) And Oracle(NYSE: ORCL) for growth. This is why.
Image source: Getty Images.
Coca-Cola and PepsiCo are both Dividend Kings. Coke has paid and increased its dividend for 62 years in a row, while Pepsi has increased its payout for 52 years. Both companies use dividends as an important way to pass profits to investors. But weak consumer spending and price pressures have led to recent selloffs in both stocks.
Coca-Cola is up big this year, but is down 8.7% in the past month. The selloff accelerated after Coke reported weak earnings results. Meanwhile, Pepsi is up less than 4% over the past three years as the company faces declining volumes at its beverage brands, as well as at Pepsi-owned Frito-Lay and Quaker Oats.
Coke and Pepsi have phenomenal product portfolios and their challenges appear solvable, making the selloff in both stocks an excellent buying opportunity for patient investors.
Chevron may be in a different industry than Coca-Cola and Pepsi, but the reason for buying the stock is similar. Chevron has raised its dividend for 37 years in a row and yields a whopping 4.3%, which is significantly higher than the average holding in the Vanguard Value ETF.
Falling oil prices have put pressure on energy companies, but Chevron has a highly efficient and diversified exploration and production portfolio, as well as extensive refining and marketing operations.
The company’s strategy is based on fairly mediocre oil prices, with the upside scenario assuming a flat $70 oil price between 2025 and 2027 and the downside scenario assuming $50 oil over that period. Even at $50 oil prices, Chevron can support its dividend and finance a modest investment plan. For context, crude oil prices in West Texas are currently around $67 per barrel, a 2024 low.
At first glance, it may seem strange that Broadcom and Oracle are in the Vanguard Value ETF and not the Vanguard Growth ETF. Both companies have accelerated revenue growth in recent years and seen their market capitalization rise to new heights. But historically, Broadcom and Oracle have represented more value-oriented parts of the technology sector. Both companies also pay growing dividends.
Broadcom makes hardware and software solutions for cloud infrastructure, data centers, networking, broadband, wireless, storage, industrial applications, enterprise software and more. It’s a comprehensive way to invest in global connectivity and the components that support infrastructure, such as Ethernet switches that support AI workloads.
Oracle is an experienced technology company with a background in database software. But lately, cloud computing has been driving revenue growth with high margins. The following chart shows Oracle’s revenue for the last twelve months of the past fifteen years.
Oracle started paying dividends in 2009. It started at $0.05 per share per quarter, but has since risen to $0.40 per share per quarter. Similarly, Broadcom’s quarterly dividend started at just $0.007 per share in 2010 and has risen to $0.53 per share.
Over the past year, Oracle’s stock price is up 72%, compared to 114% for Broadcom. The run-up has pushed down both companies’ yields, with Oracle now yielding just 0.9%, compared to 1.2% for Broadcom. Still, both companies may be attractive to investors looking for a combination of value and passive income, as both companies have demonstrated a commitment to growing their profits and passing profits on to shareholders through dividends.
Despite hovering around their all-time highs, Broadcom and Oracle remain two of the best tech stocks to buy now. Broadcom rose 4.2% on October 29 after news that the company is working on a new chip with OpenAI. The company has been expanding its artificial intelligence (AI) offerings, but AI is just one aspect of this diversified juggernaut.
ORCL Earnings Chart (TTM).
Oracle enjoyed strong sales growth in the late 2000s and early 2010s, but its results languished as it became a sluggish and sluggish technology company. AI opened the door to a new opportunity for Oracle. Oracle Cloud has proven to be simpler and more flexible than competing services, with Oracle providing servers, storage, applications and other services.
Broadcom and Oracle have gained a foothold in their industries, and their revenues provide ample opportunity to allocate capital to new projects. Both companies are excellent ways to invest in technology while collecting growing dividends.
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Daniel Foelber has no position in any of the stocks mentioned. The Motley Fool holds and recommends Chevron, Oracle, Vanguard Index Funds-Vanguard Growth ETF, Vanguard Index Funds-Vanguard Value ETF, and Vanguard S&P 500 ETF. The Motley Fool recommends Broadcom. The Motley Fool has a disclosure policy.
If I could only buy five stocks in the Vanguard Value ETF through 2025, I’d pick these three high-yield Blue-Chip Dividend stocks, and these two Top Tech stocks were originally published by The Motley Fool
