Strong businesses with high dividend payouts, competitive advantages, and future growth potential can be phenomenal long-term investments. It is even better if these stocks can be purchased at a discount to their intrinsic value.

The beauty of earning passive income is that it allows investors to generate income for doing almost nothing.

The following 3 blue chip dividend stocks have solid yields above the S&P 500 average, and can raise their dividends each year.

Gorman-Rupp Co. (GRC)

Gorman-Rupp began manufacturing pumps and pumping systems back in 1933. Since that time, it has grown into an industry leader with annual sales of nearly $700 million and a market capitalization of ~$1 billion. 

Today, Gorman-Rupp is a focused, niche manufacturer of critical systems that many industrial clients rely upon for their own success. Gorman Rupp generates about one-third of its total revenue from outside of the U.S. 

Gorman-Rupp posted third quarter earnings on October 25th, 2024, and results were weaker than expected on both the top and bottom lines. Adjusted earnings-per-share came to 49 cents, but that was six cents light of estimates. 

Revenue was essentially flat year-over-year at $168 million, but missed expectations by over $4 million. The gain in the top line was due to pricing increases that were put in place to help offset a decline in volumes. Gross profit was $5.27 million in the quarter, or 31.3% of revenue. This was better than the $48.1 million and 28.7%, respectively, achieved in the prior year period.

The company can achieve future growth through high single-digit sales growth. Given the company’s robust backlog of uncompleted work, we see revenue growth continuing for the near term, which the company says continues to occur. 

Gorman-Rupp’s primary earnings growth driver is certainly revenue as its margins fluctuate over time, and Gorman Rupp is focusing on cost containment efforts to help combat this while it waits for revenue to rise. The company is seeing higher margins so far in 2024. 

The company also has one of the most impressive dividend increase streaks in the market, which currently stands at 52 years. That makes Gorman-Rupp a member of the prestigious Dividend Kings. 

GRC stock currently yields 2%.

Becton, Dickinson & Co. (BDX)

Becton, Dickinson & Co. is a global leader in the medical supply industry. The company was founded in 1897 and has 75,000 employees across 190 countries.

The company generates about $20 billion in annual revenue, with approximately 43% of revenues coming from outside of the U.S.

BDX reported results for the fourth quarter and fiscal year 2024, which ended September 30th, 2024. For the quarter, revenue grew 6.9% to $5.44 billion, which was $57 million more than expected.

On a currency neutral basis, revenue improved 7.4%. Adjusted earnings-per-share of $3.81 compared favorably to $3.42in the prior year and was $0.04 ahead of estimates.

For the fiscal year, revenue grew 4.2% to $20.2 billion while adjusted earnings-per-share of $13.14 compared to $12.21 in the prior year.

BD provided an outlook for fiscal year 2025 as well. Revenue is projected to be in a range of $21.9 billion to $22.1 billion for the fiscal year, which represents ~9% growth year-over-year. Adjusted earnings-per-share is expected to be in a range of $14.25 to $14.60, representing growth of 9.8% from last fiscal year.

BD has increased earnings-per-share 7.0% per year over the past decade, and has grown earnings in 7 out of the last 10 years. We continue to believe that BD can grow earnings at a rate of 8% per year through fiscal 2030. 

BD showed that it can perform well in less-than-ideal economic conditions during the last recession. The company’s key competitive advantage is that its products are in high demand as medical devices and other healthcare products are still sought out during a recession.

On November 7th, 2024, BD increased its quarterly dividend 9.5% to $1.04, extending the company’s dividend growth streak to 53 consecutive years. BDX stock currently yields 2%.

Sysco Corp. (SYY)

Sysco Corporation is the largest wholesale food distributor in the United States. The company serves 600,000 locations with food delivery, including restaurants, hospitals, schools, hotels, and other facilities.

On October 31st, 2024, Sysco reported first-quarter results for Fiscal Year (FY) 2025. Quarterly sales increased by 2.6% year-over-year to $19.6 billion, driven by a 1.6% growth in U.S. Foodservice volume. The U.S. Foodservice segment maintained steady growth, with sales rising to $13.7 billion, a 0.9% increase from the prior year. 

Total case volume expanded 1.6%, although local case volume declined slightly by 0.1%. Gross profit for the segment climbed 2.8% to $2.7 billion, with operating income up 3.9% to $941.0 million. International operations showed stronger performance, with sales surging 12.2% to $3.7 billion, bolstered by favorable foreign exchange rates and a constant currency increase of 9%.

The company returned $352.9 million to shareholders through share repurchases and dividends, aiming for a total shareholder return of $1.75 billion in FY 2024.

Sysco remains optimistic about achieving its fiscal year 2024 guidance, projecting mid-single-digit sales growth to approximately $80 billion and adjusted EPS growth between 5% and 10%.

Sysco has an economic moat due to its large-scale and entrenched distribution infrastructure, which gives it a cost advantage over most competitors. This moat is evidenced by the company's double-digit returns on invested capital every year, much higher than its weighted average capital cost. 

It's also quite defensive; the company was almost unfazed by the previous recession and recovered from a mild earnings dip within one year. Thanks to this stability, Sysco has raised its dividend every year since it went public, and we expect it to continue to grow in the years to come.