Home Companies 10 Best Blue Chips – How to Select the Right Blue Chips For Your Investing Portfolio

10 Best Blue Chips – How to Select the Right Blue Chips For Your Investing Portfolio

by gbaf mag

Blue chip stocks are some of the safest investments on the market. They are in stock in a company with a stellar national reputation for reliability, quality, and the capability to operate during both bad and good economic times. Blue chip stocks often epitomize what a company does best: providing a reliable source of income with the potential for great profits. While there are many great stocks out there, not all of them will provide this potential for reward; and some blue chips will prove to be a more difficult investment than others.

A blue chip stock should have a long history of success. This doesn’t necessarily mean they have performed well from year to year. It means that over the past two or three years, they have been consistently producing dividends, meeting their financial obligations, and providing shareholders with high financial returns. The longer a stock has operated, the more experienced and knowledgeable the management team should be. Companies with a long history and a wide range of experience are less likely to experienceudden dips in prices (and even if they do, it won’t be at a stock price that they cannot afford). Companies with a wide range of experience also tend to avoid companies with short histories.

As well as a long history, blue chip stocks should have a proven track record of dividend yield investment growth. Dividends yield is the annual return on a company’s stock price per share. If a company is able to increase its earnings per share by 2% over a period of time, they will then pay themselves out a dividend. Dividends are an incentive for company management to work hard to increase the company’s revenues and profits. It also increases shareholder value and provides them with an income. Most blue chip companies will pay dividends quarterly.

Next, look to see how much you expect the company to pay out during their next quarterly dividend payment. This will allow you to see if you would be better off picking one of the top 10 best blue chip stocks in the market. The payout amount will vary greatly between companies. A highly profitable company that pays out a high dividend each quarter may only pay out pennies per share in a year. However, a small cap company could pay out millions of dollars.

Dividends should not be looked at merely as an indication of a good company on which to invest. Dividends should also provide you with an indication of what is happening within the business. Many blue-chip stock investors focus solely on the dividends, ignoring the stock price. Investors need to pay attention to the profit and loss statement of the company, looking for any signs of distress such as decreasing sales or recent financial issues. If there is a trend towards decreasing profit, investors should consider selling their shares and moving onto another strong stock.

It is important to note that the Dividend Reinvestment Screener used by Market Edge is not intending to select blue chip stocks. Rather, it is designed to help determine if an investor can maximize his or her return by re-investing dividends to take advantage of the current dividend yield. The expected EPS growth and reinvestment amount are included as part of the overall Dividend Reinvestiture calculation. Therefore, it is important to understand what an investor presentation should look like before selecting a stock to add to one’s portfolio.

Most investors focus on companies that pay out large dividends when determining which blue chip stocks to invest in. However, it is possible to obtain high returns from investing in companies that offer low dividend yields, yet still offer great growth potential. Some investors use blue chip stocks to “get in early” and purchase stocks that have low projected growth potential, such as oil extraction stocks. By purchasing these stocks at a lower price, an investor can pay out a larger dividend and increase his or her return on investment over time. If the price of the stock falls enough, however, then an investor may regret their decision due to the company’s inability to sustain its price and growing dividend.

As can be seen, there are a number of different approaches that an investor can take when researching which blue chips to add to his or her portfolio. No matter which method you choose, it is essential to do your homework and know which companies are actually offering good growth prospects and which ones are only using the dividend growth model to lure investors into paying out more dividends. Doing your research and choosing the right stocks will ultimately increase your chances of achieving your financial goals. Once you have chosen which blue chips to invest in, be sure to review the Blue Chip Stocks Report monthly to stay on top of the industry.


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