Recent stock market volatility has unsettled investors. With markets plummeting as much as 300 points one day and recouping losses the next, you're not alone if you've reevaluated your portfolio's blue-chip stocks list.
Money managers say get used to it. Volatility is the new norm. Uncertainty surrounding interest rates will continue to keep markets jumpy in 2015.
But sitting on the sidelines won't make you any money. We have recently covered safe ways to profit from small caps and biotech, and now let's look at a short blue-chip stocks list to keep you profiting this year...
A Blue-Chip Stocks List for Today
Investors like blue chips because they're typically sector leaders boasting market caps in the billions. Many also pay attractive dividends. The combination of growth, value, and dividend income continues to draw investors to blue chips.
Blue-chip dividend growers have become particularly appealing. A key argument for remaining in blue chip dividend-paying stocks has shifted from their value solely as an income-producing investment to their potential for future dividend growth.
Last year we created a list of four criteria for good blue-chip stocks:
- Must be a member of a major index. Because blue-chip stocks are major companies and household names, we require that our new class of blue chips be tracked by one of the major S&P or Nasdaq indexes, or the Dow Jones Industrial Average.
- Must have a market cap over $30 billion. Large-cap companies are defined as having a market cap over $10 billion. We went higher and picked a $30 billion minimum to ensure we're picking the biggest, most stable firms.
- Must pay regular dividends and have a minimum yield of 2.5%. Dividend payments are another hallmark of blue chips. Investors want stocks that can bring modest returns even when the markets are underperforming. Strong and regular dividend payments ensure investors always see some income.
- Five-year EPS growth estimate over 5%. We also want companies projecting solid growth in the long term. Each of the companies listed below expects to increase earnings by at least 5% over the next five years.
Here's a list of blue-chip stocks providing value, growth, and expanding dividend potential. The three, also Dow Jones Industrial Average components, make attractive portfolio anchors.
3 Blue-Chip Stocks for 2015
Intel Corp. (Nasdaq: INTC) has been the driving force behind the technology revolution for some four decades. Since its inception in 1968, Intel has been a leader in technology innovation. Indeed, Intel is one of the world's largest and highest valued semiconductor chipmakers. Its x86 series of microprocessors is found in most personal computers. And amid the mobile market explosion, INTC has pushed in that direction. The company's just-launched Sofia chips are ideal for the fast-growing, low-end smartphone market in Asia. The Sofia 3G chips currently shipping have features for low-end phones. The 4G versions for pricier smartphones will be released later this year. INTC is also vying for a sizable role in the auto market (smart cars) and the wearable tech market. Newer cars incorporate as many as 100 chips controlling everything from braking to dashboard displays. Shares trade at a modest P/E of 12.95 and yield 3.19%. Intel has paid and regularly boosted dividends since 1992.
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General Electric Co. (NYSE: GE) has the 14th-biggest market cap today at just under $254.8 billion. Its full-time employee headcount is a whopping 305,000. Founded in 1892, GE is a company that's still evolving. GE has adjusted to a post-financial crisis world by reducing its banking presence. Its finance business nearly toppled the company during the depths of the 2008 financial crisis. GE's financial business has historically generated more than half of its profits. Next year, the segment should bring in 25% of the company's profits. Meanwhile, GE is boosting its more durable and higher-quality earnings stream segments, such as making jet engines and power turbines. The shift is expected to give shares a lift. A trimmed-down finance portfolio should temper the volatility of GE's earnings and boost valuation. Investors along for the ride also enjoy a highly competitive 3.2% yield. Over the last 12 months, GE's dividend per share growth rate was 12.7%. During the past three years, it was 13.4%.
Altria Group Inc. (NYSE: MO) is a dividend dynamo. "What makes this company a gem for investors is its dividend gains," Money Morning Chief Investing Strategist Keith Fitz-Gerald told his readers last year. Altria owns three premier tobacco operating companies. Each holds a leading position in the largest and most profitable U.S. tobacco categories: cigarettes, smokeless tobacco products, and large machine-made cigars. Altria's tobacco businesses are complemented by strategic investments in the lucrative alcohol industry. The company owns Ste. Michelle Wines Estates. It also maintains a 27% economic interest in SAB Miller Plc. (LON: SAB). Last September, MO boosted its dividend for the 48th time in the last 45 years. Shares yield a smoking 4.11%. The median analysts rating on MO is "Buy," according to Zacks. The consensus 12-month price target is $58.50. At last check, shares were trading at $50.59.
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