If you’re looking for a higher upside potential without dividends, then growth stocks are the ones to consider. The fast dividend growth was possible through solid earnings growth and a safe dividend payout ratio. Comcast is one of the largest players in the entertainment industry. New market entrants would have to spend many billions of dollars to establish as a key cable player or entertainment network. Blue chip companies are financially stable business entities.
Alternatively, investors can choose to invest in an ETF or mutual fund. Whereas mutual funds are actively managed, ETFs simply follow an index. Many popular blue-chip ETFs track one of the indexes mentioned earlier in this article.
Another way for investors to gain exposure to blue chip stocks is through an index fund that benchmarks the Dow Jones Industrial Average . Index funds and ETFs track an index, which is a specific segment of the stock market. Since blue-chip stocks typically have large market caps, a large-cap index fund or ETF is a good way to get exposure to these companies. You can also buy a fund that tracks the S&P 500 or the Dow Jones Industrial Average since both include blue-chip stocks. FedEx’s share price has fallen alongside the downturn of the stock market and slowing e-commerce shipments.
- 3M currently pays a dividend of $1.49 which represents an annual dividend yield of 4.47%.
- This pricing power also means these companies generate positive free cash flow which they can use to reward shareholders.
- Blue-chip stocks can offer a lower-risk and less volatile investment opportunity, and they are often considered to be safe haven assets, given their leadership status within their industries.
- The dividend yields for these stocks vary in percentage, with some offering a high figure of around 15%.
- Otherwise, over the next several decades, they risk becoming just another statistic.
- There’s no official list of blue chip stocks, but the Dow Jones Industrial Average, which lists 30 prominent companies, is a good place to start.
Johnson & Johnson belongs to the healthcare sector, where they manufacture medical devices, pharmaceuticals and consumer packaged goods, headquartered in New Jersey, USA. This is one of the most recognised brands across the globe, due to their success in manufacturing and retailing of soft drinks and syrups. They have been producing Coca-Cola since 1892 and still have a large market share in the industry. Please ensure you understand how this product works and whether you can afford to take the high risk of losing money.
Why Are Blue-Chip Stocks Popular?
Even the professionals get that wrong all the time,” Greenman said. Finder.com provides guides and information on a range of products and services. Because our content is not financial advice, we suggest talking with a professional before you make any decision.
The added pressure on GOOGL stock following the Q3 earnings has dragged the shares’ value down a total of 33% on the year. (A 20-for-1 stock split in July also lowered the share price). While discouraging, the decline makes Alphabet stock look very attractive at its current levels.
Alternatively, it can be just as hard to decide what to do when some investments are up significantly, causin… Get started investing in REITs with a primer on the sector, including the most popular REIT stocks, different types of REITs, and risks to avoid. Without free cash flow, companies have fewer resources at their disposable to continuously reinvent themselves and can also be more dependent on access to credit markets. Both of these factors can significantly shorten a company’s lifespan. Though the main indices have fallen by 7-8% odd percentage points, few top stocks have corrected by 15% or more. But stocks of a few blue chip companies have corrected much more.
Adjusted earnings-per-share of $2.96 compared very favorably to $1.92 in the previous year and was $0.09 ahead of estimates. On April 13th, 2022, Qualcomm increased its quarterly dividend 10.3% to $0.75, marking the company’s 20th consecutive year of dividend growth. While there is no precise definition of what makes a blue chip stock, a blue chip stock tends to be a stock of a company that is large, financially sound and has an excellent reputation. Market CapitalizationMarket capitalization is the market value of a company’s outstanding shares.
The 7 best blue-chip stocks as ranked by 5-year expected annual returns from the Sure Analysis Research Database are analyzed in detail below. Our top 7 best blue-chip stock list excludes MLPs and REITs. In addition to the Excel spreadsheet above, this article covers our top 7 best blue-chip stock buys today as ranked using expected total returns from the Sure Analysis Research Database.
Johnson & Johnson
A blue-chip stock is a stock that comes from a well-known, established company. Blue-chip stocks have a strong history of performance and often pay dividends. The earnings and positive guidance show that Home Depot has been how much money can i make day trading forex unfairly dragged lower by this year’s market rout. Add in a P/E ratio on the stock of only 17 times and a quarterly dividend that yields 2.62%, and it’s easy to make the case that investors should buy the dip of HD stock.
The share prices of these companies have often grown steadily for decades and most of them pay relatively high, and often increasing, dividends. However, just about every investor can benefit from having a portion of their portfolio invested in blue chip stocks. It doesn’t have to be a set percentage; different investors will have different viewpoints about how much risk they want to assume. Blue-chip stocks are the shares of companies that are well-known and highly respected by both customers and business analysts alike. Blue-chip stocks are sometimes perceived as safe havens due to their stability within the financial industry. In periods of market uncertainty, investors may choose to trade blue-chip stocks in order to reduce their total risk exposure.
Blue-Chip Stock #5: 3M Company (MMM)
The cool thing about ETFs is that they trade like stocks and you can buy them from any brokerage or a trading platform. This provides instant diversification to your portfolio without much effort. There’s no official list of blue chip stocks, but the Dow Jones Industrial Average, which lists 30 prominent companies, is a good place to start. These companies are often regarded as some of the country’s most valuable and reliable heavyweights. However, a sports analogy may demonstrate the subjectivity involved in identifying blue chip stocks.
In other words, it’s important to spread out your investments across many types of stocks and bonds so your exposure to one single section of the market is limited. Blue chip stocks are usually solid picks to have in any investment portfolio since they have a proven track record of holding value and paying dividends. They’re great to have in any investment portfolio, but that’s not to say they should comprise your whole portfolio. An ETF is a fund that holds a basket of stocks; In this case, a basket of blue chip companies.
What Are Blue-Chip Stocks?
However, these companies have loyal consumers that are willing to seek out their brands at the expense of their competitors. MarketRank evaluates a company based on community opinion, dividend strength, institutional and insider ownership, earnings and valuation, and analysts forecasts. Get stock recommendations, portfolio guidance, and more from The Motley Fool’s premium services. Neither the author nor editor held positions in the aforementioned investments at the time of publication. Blue-chip stocks are in major market indexes like the S&P 500, the Dow Jones Industrial Average and/or the Nasdaq 100. This year’s pullback is one of the steepest in the company’s history.
3M’s next Ex-dividend date is November 17, 2022 and its next payout date is December 12, 2022. Johnson & Johnson currently pays a dividend of $1.13 which represents an annual dividend yield of 2.59%. Johnson & Johnson’s next Ex-dividend date is November 21, 2022 and its next payout date is December 6, 2022. View our full suite of financial calendars and market data tables, all for free. Volatility profiles based on trailing-three-year calculations of the standard deviation of service investment returns. Pays dividends to shareholders and regularly increases its payouts.
Blue-chip stocks can offer a lower-risk and less volatile investment opportunity, and they are often considered to be safe haven assets, given their leadership status within their industries. Blue-chip stocks come from large and well-established companies with a market capitalization of over $10 billion. These companies have investment banking valuation leveraged buyouts and mergers and acquisitions solid long-term track records of financial stability and steady growth. These young investors are often attracted to the stock market by stories about spectacular short-term returns, as we’ve seen during the “meme stock’’ saga . Blue-chip stocks tend to be more popular among long-term and older investors nearing retirement.
It’s gut-wrenching to go through, but for prudent investors, it just provides even better investing opportunities. As a result, its stock price tends to be less volatile than many other stocks. On top of that, it’s able pit bull trading to keep paying investors dividends each year. It has one of the longest track records with having paid dividends for more than 130 years in a row. The best companies can easily survive and thrive through the downturn.