With so much uncertainty in the world right now, companies that offer steady returns and reliable cash flows are looking more and more attractive to investors with each passing day. It can really pay off to add a few blue-chip stocks to your portfolio that you know you can count on. These are stocks that won’t necessarily generate outsized returns in the short-term, but what they can do is provide income and safety to your portfolio over the years if you stick with them.
A blue-chip stock is generally considered to be a large established company that is financially sound and generates consistent earnings. They typically pay dividends and are leaders in their respective industries. While no company is invincible, investors tend to view blue chip companies as lower-risk investments that are able to survive challenging economic periods thanks to their financial stability. That’s why they are an attractive option at this time. Here are 3 blue chip stocks to buy with reliable dividends:
The first blue chip stock on our list is Home Depot, a company that has seen its sales surge this year thanks to low mortgage rates and people focusing on home improvement projects during the pandemic. Home Depot operates a chain of 2,293 retail warehouse stores and sells home improvement products out of its large stores that come in at an average of 130,000 square feet. While many brick-and-mortar retailers have slowly withered away thanks to the convenience of companies like Amazon (NASDAQ:AMZN), Home Depot continues to experience strong momentum. Since it sells products that customers typically want to check out physically before buying, there will likely always be a need for Home Depot’s stores.
Home Depot saw its net sales increase by 23.4% year-over-year in Q2 to $38.1 billion. Net earnings grew by 24.5% year-over-year in Q2 as well. While these numbers likely received a boost thanks to the strong demand for home improvement products during the pandemic, there is still room for growth. The company plans to expand abroad into countries like Mexico and should continue to see strong sales momentum thanks to a favorable housing market. It has also invested in additional sales channels such as e-commerce that have already started to pay off. Over the last 5 years, Home Depot has returned $59 billion to shareholders via share repurchases and dividends. The stock currently offers a 2.17% dividend yield and is one of the best blue chip companies out there.
Next on our list is Qualcomm, a company that develops and commercializes digital communication technology. It’s the clear market leader in wireless chips and should benefit greatly from the rollout of 5G technology over the next few years. Since Qualcomm
owns patents used in 3G, 4G, and 5G networks, it receives royalty income for most of the handsets that are sold. The company has faced some intense legal battles over the last several years, but it appears that those days are now behind it. Qualcomm actually won a major antitrust case in FY20 and also signed a multi-year licensing agreement with Huawei, which are both big positives for investors to consider.
Qualcomm’s Q4 earnings were very impressive, as the company reported a year-over-year revenue increase of 73% along with an Adjusted EPS that increased by 86% year-over-year. Additionally, Q4 net income for Qualcomm increased by 82% year-over-year to $2.9 billion. This report could be a sign of good things to come for shareholders next year as the rollout of 5G accelerates. Qualcomm stock offers a 1.81% dividend yield and it is a great option for investors that are interested in exposure to a high-quality semiconductor company poised for a massive 2021.
Procter & Gamble (NYSE:PG)
The final blue chip stock on our list is Procter & Gamble, a member of the S&P 500 and the leading consumer products company in the world with over $71 billion in sales. There’s a lot to like about this company as it has seen strong sales growth both before and during the pandemic. With iconic brands like Tide, Pampers, Oral B, Gillette, and Bounty, it’s a company that generates reliable sales regardless of what is happening in the economy. With shifting consumer habits such as more people working from home, it wouldn’t be surprising to see the sales momentum continue for this consumer staples powerhouse in the short term.
Procter & Gamble currently has a 2.2% dividend yield and is a dividend aristocrat, meaning that has increased its dividend payouts for over 25 consecutive years or more. In fact, it has increased its dividend for 64 consecutive years. The company had a strong Q1 which saw Net Sales increase by 9% year-over-year and Diluted Net EPS increase by 20% year-over-year. It was also impressive to see that Procter & Gamble reported 50% e-commerce sales growth in Q1 and that the company increased its guidance. Finally, this company is a cash flow generating machine and saw an operating cash flow of $4.7 billion in Q1. The bottom line here is that Procter & Gamble is a blue chip stock that likely belongs in any long-term portfolio.
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15 Stocks that Insiders Love
An insider trade occurs when a corporate executive (such as a CEO, CFO or COO) that has non-public information about a company buys or sells shares of that company's stock. Company insiders are required by law to regularly report their stock purchases and sales to the SEC.
Tracking a company's insider trades is a metric that can be used to identify the direction that the company's executives believes that the company is headed. If a number of insiders purchase more shares of their company, they may believe that the company will have strong future earnings and that the share price will increase in the near future.
For example, if Microsoft's CEO, CFO and COO all recently purchased additional shares of Microsoft stock, that would be an indication that there could be unreported news that may positively effect Microsoft's stock price in the near future.
This slideshow lists the 15 companies that have had the highest levels of insider buying within the last 180 days.
View the "15 Stocks that Insiders Love".