Up to date on September 14th, 2021 by Bob Ciura
Spreadsheet knowledge up to date each day
In poker, the blue chips have the best worth. We don’t like the thought of utilizing poker analogies for investing. Investing needs to be far faraway from playing. With that stated, the time period “blue chip shares” has caught for a choose group of shares….
So what are blue chip shares?
Blue chip shares are established, secure, dividend payers. They’re typically market leaders and have a tendency to have a protracted historical past of paying rising dividends. Blue chip shares have a tendency to stay worthwhile even throughout recessions.
At Positive Dividend, we outline blue chip shares as firms which can be members of 1 or extra of the next 3 lists:
You may obtain the entire listing of all 260+ blue chip shares (plus necessary monetary metrics comparable to dividend yield, P/E ratios, and payout ratios) by clicking beneath:
Along with the Excel spreadsheet above, this text covers our prime 7 greatest blue chip inventory buys at the moment as ranked utilizing anticipated whole returns from the Positive Evaluation Analysis Database.
Our prime 7 greatest blue chip inventory listing excludes MLPs and REITs. The desk of contents beneath permits for straightforward navigation.
Desk of Contents
The spreadsheet and desk above give the total listing of blue chips. They’re an excellent place to get concepts on your subsequent prime quality dividend progress inventory funding…
Our prime 7 favourite blue chip shares are analyzed intimately beneath.
The 7 Finest Blue Chip Buys Immediately
The 7 greatest blue chip shares as ranked by 5-year anticipated annual returns from The Positive Evaluation Analysis Database (excluding REITs and MLPs) are analyzed intimately beneath. On this part, shares have been additional screened for passable Dividend Threat rating of ‘C’ or higher.
Blue Chip Inventory #7: Bancfirst Corp. (BANF)
- Dividend Historical past: 28 years of consecutive will increase
- Dividend Yield: 2.5%
BancFirst Corp. (BANF) serves because the monetary holding Firm for BancFirst, a state–chartered financial institution in Oklahoma. The Firm was based in 1984, and the following yr proceeded to merge with seven different financial institution holding firms based mostly in Oklahoma. BancFirst has 107 banking areas serving 58 communities all through Oklahoma.
BancFirst affords quite a lot of business banking companies to retail clients and small and mid–sized companies. For retail clients, this consists of checking, financial savings, CDs, private loans, and different companies. The financial institution affords enterprise lending companies for business clients, together with agricultural and multi–household loans, and varied enterprise banking companies.
BANF inventory trades for a 2021 P/E ratio of 12, in contrast with our honest worth estimate of 15. Shareholder returns will likely be boosted by a rising valuation a number of, anticipated EPS progress of 6%, and the present dividend yield of two.6%. Total, whole returns are anticipated to achieve 12.5% per yr over the following 5 years.
Click on right here to obtain our most up-to-date Positive Evaluation report on Bancfirst (preview of web page 1 of three proven beneath):
Blue Chip Inventory #6: Royal Gold, Inc. (RGLD)
- Dividend Historical past: 20 years of consecutive will increase
- Dividend Yield: 1.1%
Royal Gold Inc. is a treasured metals royalty and streaming firm that owns curiosity in some of the world’s most fascinating mines. The company’s major focus is buying and managing treasured steel stream and royalty pursuits.
The inventory trades for a 2021 P/E ratio is 26, in contrast with our honest worth estimate of 35. Shareholder returns will likely be boosted by a rising valuation a number of, anticipated EPS progress of 5.5%, and the present dividend yield of 1.1%. Total, whole returns are anticipated to achieve 12.6% per yr over the following 5 years.
Click on right here to obtain our most up-to-date Positive Evaluation report on Royal Gold (preview of web page 1 of three proven beneath):
Blue Chip Inventory #5: South Jersey Industries (SJI)
- Dividend Historical past: 22 years of consecutive will increase
- Dividend Yield: 5.1%
South Jersey Industries buys, transports, shops, and sells pure fuel. The utility operates in three segments: SJI Utilities, SJI Midstream, and South Jersey Power Solutions. Elizabethtown Gasoline was acquired in 2018. The corporate owns and operates rooftop photo voltaic era at company websites, gas cells, and is investing in renewable pure fuel tasks.
Moreover, the utility owns oil, fuel, and mineral rights within the Marcellus Shale area of Pennsylvania. South Jersey owns roughly 10,000 miles of distribution and transmission pipeline and serves over 700,000 whole clients.
SJI inventory trades for a 2021 P/E ratio of 14.5, in contrast with our honest worth estimate of 18. Shareholder returns will likely be boosted by a rising valuation a number of, anticipated EPS progress of three%, and the present dividend yield of 5.1%. Total, whole returns are anticipated to achieve 13.6% per yr over the following 5 years.
Click on right here to obtain our most up-to-date Positive Evaluation report on South Jersey Industries (preview of web page 1 of three proven beneath):
Blue Chip Inventory #4: AT&T Inc. (T)
- Dividend Historical past: 36 years of consecutive will increase
- Dividend Yield: 7.6%
AT&T is a telecommunications big, as its core Communications phase gives cellular, broadband and video to 100 million U.S. shoppers and three million companies. Within the 2021 second quarter, AT&T generated $44.0 billion in income, up 7.6% from Q2 2020. Adjusted earnings-per-share (EPS) equaled $0.89 in comparison with $0.83 within the yr in the past quarter. AT&T ended the quarter with a web debt-to-EBITDA ratio of three.15x.
Supply: Investor Presentation
AT&T is optimistic about producing cheap progress and the payout ratio had been falling, leading to extra funds to divert towards paying down debt. AT&T additionally has a protracted historical past of accelerating dividends every year (AT&T is at the moment a Dividend Aristocrat).
With a P/E beneath 10, AT&T is undervalued in opposition to our honest worth estimate of 11. The mixture of three% anticipated EPS progress and the 7.6% dividend yield result in whole anticipated returns of 13.9% per yr over the following 5 years.
Click on right here to obtain our most up-to-date Positive Evaluation report on AT&T (preview of web page 1 of three proven beneath):
Blue Chip Inventory #3: The Scotts Miracle-Gro Firm (SMG)
- Dividend Historical past: 12 years of consecutive will increase
- Dividend Yield: 1.7%
The Scotts Miracle–Gro Firm is without doubt one of the world’s main entrepreneurs of branded client garden and backyard as nicely as hydroponic and indoor rising merchandise. The corporate affords fertilizers, grass seed products, spreaders, out of doors cleaners, and any garden–associated weed, pest, and illness management merchandise. Scotts Miracle–Gro generates round $4.3 billion in annual income.
On August 4th, 2021, Scotts Miracle–Gro reported its Q3–2021 outcomes for the quarter ended July 3rd, 2021. The corporate achieved gross sales of $1.61 billion in the course of the interval, an 8.1% improve in comparison with Q3–2020, primarily pushed by a 48% improve within the Hawthorne phase.
Shares have a comparatively low dividend yield of 1.8%, however the mixture of dividends and anticipated EPS progress of seven% per yr (with a flat P/E a number of) will gas anticipated returns of 14.5% per yr.
Click on right here to obtain our most up-to-date Positive Evaluation report on Scotts Miracle-Gro (preview of web page 1 of three proven beneath):
Blue Chip Inventory #2: Lockheed Martin (LMT)
- Dividend Historical past: 19 years of consecutive will increase
- Dividend Yield: 3.0%
Lockheed Martin is the world’s largest protection firm. About 60% of the corporate’s revenues comes from the U.S. Division of Protection, with different U.S. authorities companies (10%) and worldwide shoppers (30%) making up the rest.
Lockheed Martin reported one other good quarter for for Q2 2021 on July 26th, 2021. Companywide web gross sales elevated to $17,029M from $16,220M and diluted GAAP earnings per share elevated to $6.52 from $5.79 on a yr–over–yr foundation. All 4 enterprise segments once more elevated web gross sales.
Supply: Investor Presentation
We anticipate Lockheed Martin to generate earnings-per-share of $26.85 in 2021. Primarily based on this, the inventory is at the moment buying and selling at a price-to-earnings ratio (P/E) of 12.8. Our honest worth estimate is a P/E of 16.0, which suggests enlargement of the P/E a number of might improve returns.
When mixed with the 8% anticipated EPS progress fee and three% dividend yield, whole return potential comes to fifteen.0% per yr over the following half-decade.
Click on right here to obtain our most up-to-date Positive Evaluation report on Lockheed Martin (preview of web page 1 of three proven beneath):
Blue Chip Inventory #1: Bristol-Myers Squibb (BMY)
- Dividend Historical past: 11 years of consecutive will increase
- Dividend Yield: 3.1%
Bristol-Myers Squibb is a number one drug maker of cardiovascular and anti-cancer therapeutics, with annual revenues of about $42 billion. The previous yr has seen the corporate remodel itself, as a result of $74 billion acquisition of Celgene, a peer pharmaceutical big which derived nearly two-thirds of its income from Revlimid, which treats a number of myeloma and different cancers.
The top result’s that Bristol-Myers Squibb is now an business big, which continues to generate robust outcomes even in the course of the coronavirus pandemic.
Supply: Investor Presentation
Primarily based on anticipated EPS of $7.45, shares of BMY commerce for a ahead P/E ratio of 8.4. Our honest worth P/E estimate is a P/E of 13-14, which is extra in-line with the pharmaceutical peer group. Lastly, BMY has a 3.1% dividend yield, resulting in whole anticipated returns of 15.4% per yr over the following 5 years.
Click on right here to obtain our most up-to-date Positive Evaluation report on Bristol-Myers Squibb (preview of web page 1 of three proven beneath):
Shares with lengthy histories of accelerating dividends are sometimes the perfect shares to purchase for long-term dividend progress and excessive whole returns. However simply because an organization has maintained a protracted observe report of dividend will increase, doesn’t essentially imply it’s going to proceed to take action sooner or later. Buyers must individually assess an organization’s fundamentals, significantly in instances of financial misery.
The coronavirus pandemic of 2020 had a major influence on the worldwide financial system, however high-quality blue chip shares such because the 7 on this article continued to generate earnings, and pay dividends to shareholders. Additionally they have compelling valuations that make them enticing picks for buyers inquisitive about whole returns.
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