The top blue chip dividend stocks are well-known among investment professionals because they often add value to portfolios. Blue chips are some of the top companies in their industries, with market value in the billions. These companies are successful, recognizable names.
While not every blue chip pays dividends, many of them do, and they make excellent additions to almost any portfolio. Here are the characteristics of the top blue chip dividend stocks, so you’ll know what to look for an add to your diversified portfolio.
Finding the top blue chip dividend stocks is easier when you know what to look for
Top blue chip dividend stocks don’t just pay dividends, they offer growth in capital gains as well. You’ll pay top dollar for the best blue chip stocks, but you can rest assured that your money is going into a profitable company with a strong reputation. Beyond that, there are some characteristics of blue chip companies to look for.
Hidden assets: There are valuable items associated with successful businesses that don’t always reach the company’s balance sheet. An example mentioned above is a brand’s positive reputation, but that’s not the only type of hidden asset. You can find these hidden assets in trademarks, publishing rights, business and development, real estate, and client or customer lists, to name a few. Furthermore, balance sheets can also have hidden value on them, where you will see undervalued assets listed. Once these hidden assets are discovered, the company’s stock value may increase significantly. These assets may also remain hidden for a period, which often happens with research and development. If the research and development projects lead to new technology, this, too, can mean new or improved revenue streams.
A history of success: You probably know the name of many blue chip companies already. Apple and Google come to mind, but there are many others. Companies that receive the blue chip label do so because of strong performances over time. These companies have a favorable reputation because they have a history of earnings and dividend payments to shareholders. This history of success, coupled with providing sustainable dividend payments, makes a company reliable in weathering market downturns. Top blue chip stocks to target will have at least ten years of profitable earnings.
Market control: Many of the best blue chip stocks are within the top three companies in a market or industry. We like to see blue chip stocks that hold a significant piece of the market segment, making them even more reliable. To look into the safety of a blue chip company further, we can look at its growth potentials and its current p/e ratio (which should be moderate). If you plan on investing in more than one blue chip company, it is best to diversify your holdings throughout market sectors. This will help your portfolio remain strong, regardless of the market’s overall direction.
Adding one or two of the top blue chip dividend stocks to your portfolio can be a great way to boost your income and portfolio value over time.
Are top blue chip dividend stocks part of your investing strategy? Do you target dividend-paying companies without worrying whether or not it’s a blue chip company?