Three Blue-Chip Dividend Stocks to Buy in October

With the stock market near record highs, driven in part by an AI-driven bubble, investors may want to consider defensive plays. Thomas Niel of The Motley Fool highlights three blue-chip dividend stocks, Chevron, McDonald's, and PepsiCo, as strong candidates for a defensive pivot into October.

Chevron (NYSE: CVX) currently offers a forward dividend yield of 3.5%. The energy giant is executing a cost-cutting plan aimed at boosting annual cash flow by 10% through 2030. In Q2, Chevron paid out $3.5 billion in dividends, repurchased $3.1 billion in shares, and reduced $8 billion in debt. These actions could significantly impact its share price and profitability.

McDonald's (NYSE: MCD) has a forward dividend yield of 3.3% and recently achieved Dividend King status with its 50th consecutive annual dividend hike. Despite a 24% price drop since January due to weak domestic same-store sales growth, international sales remain robust. Analysts predict mid-single-digit earnings growth over the next two years, making it a potential rebound candidate.

PepsiCo (NASDAQ: PEP) is another Dividend King trading at a discount. Its forward dividend yield is nearly 4.7%, and its valuation has sunk to 15 times forward earnings, well below Coca-Cola's multiple of 25. Despite recent challenges in its U.S. snack business, PepsiCo continues to deliver mid-single-digit earnings growth, making it an attractive high-yield dividend stock.