What is the average return on blue-chip stocks?
In general, the average rate of return on blue-chip stocks is around 10%, which is similar to the indices that they are featured on. A good indicator of blue-chip status is if the company is listed on a renowned stock index.
Blue-chip stocks typically have solid balance sheets, steady cash flows, proven business models, and a history of increasing dividends. For that reason, investors generally consider blue-chip stocks to be among the most secure stock investments because of their track records and performance history.
Blue chip stocks FAQ
Blue chip stocks are stocks of large, well-known, and widely respected companies. Most of these companies pay dividends and have many decades of profitable operation under their belts.
Stocks | Sector | 12-month dividend yield |
---|---|---|
Exxon Mobil Corp. (XOM) | Energy | 3.8% |
Walgreens Boots Alliance Inc. (WBA) | Health care | 7.6% |
PepsiCo Inc. (PEP) | Consumer defensive | 3% |
McDonald's Corp. (MCD) | Consumer cyclical | 2.1% |
A good return on investment is generally considered to be around 7% per year, based on the average historic return of the S&P 500 index, adjusted for inflation. The average return of the U.S. stock market is around 10% per year, adjusted for inflation, dating back to the late 1920s.
Although blue chips are reliably stable, they are unlikely to generate the same high returns as potentially riskier investments. Despite their stability, blue chip stocks can experience volatility and failure, as did some during the 2007-2008 financial crisis.
- UnitedHealth Group (UNH).
- Nvidia Corp. (NVDA).
- JPMorgan Chase & Co. (JPM).
- Salesforce (CRM).
- Caterpillar (CAT).
S.No. | Company | Industry/Sector |
---|---|---|
1. | Tata Consultancy Services Ltd | IT - Software |
2. | Infosys Ltd | IT - Software |
3. | Hindustan Unilever Ltd | FMCG |
4. | Reliance Industries Ltd | Refineries |
And the real benefit to these stocks is that they pay a dividend which increases your total return. Over time, a strong total return is the key to building wealth. Here are seven high-yield blue-chip stocks to help you meet your retirement goals no matter where you are on your investment journey.
How do I invest in blue-chip stock? You can purchase blue-chip stocks through online brokerage firms or gain access to them through blue-chip funds. Given the high price-tag per share for some blue-chip stocks, some investors are opting to buy into these companies through fractional trading offerings.
Does Warren Buffett invest in dividend stocks?
Along with his penchant for value investing, Buffett is known for being a great fan of companies that engage in regular share buybacks and hefty dividend payouts.
Ares Capital and British American Tobacco are two high-yielding blue-chip stocks that offer strong total return potential and attractive dividend yields. Despite potential risks, both companies have durable business models and low valuations, making them good investment options for value and income investors.
The company is a Dividend King, meaning it has raised its shareholder payout at least once annually for a minimum of 50 years. Its current streak stands at a hard-to-conceive 62 straight years. Coca-Cola management is well aware that the dividend is a big part of the stock's attraction.
With a $10,000 account, a good day might bring in a five percent gain, which is $500. However, day traders also need to consider fixed costs such as commissions charged by brokers. These commissions can eat into profits, and day traders need to earn enough to overcome these fees [2].
The truth is that most investors won't have the money to generate $1,000 per month in dividends; not at first, anyway. Even if you find a market-beating series of investments that average 3% annual yield, you would still need $400,000 in up-front capital to hit your targets.
While quite a few personal finance pundits have suggested that a stock investor can expect a 12% annual return, when you incorporate the impact of volatility and inflation, 7% is a more accurate historical estimate for an aggressive investor (someone primarily invested in stocks), and 5% would be more appropriate for ...
Stock (ticker) | Market Capitalization |
---|---|
Johnson & Johnson (JNJ) | $378 billion |
Procter & Gamble Co. (PG) | $377 billion |
AbbVie Inc. (ABBV) | $320 billion |
Coca-Cola Co. (KO) | $256 billion |
Understanding a Blue Chip Stock
While dividend payments are not absolutely necessary for a stock to be considered a blue chip, most blue chips have long records of paying stable or growing dividends.
Because blue chip companies are relatively stable, blue chip stocks are considered a low-risk investment. In all likelihood, no matter what happens tomorrow, the most established companies in the banking or real estate sector would not collapse overnight, so investing in them is a relatively safe bet.
STMicroelectronics (STM): STM is an exceptionally undervalued stock based on its fundamentals. Indie Semiconductor (INDI): Hindi semiconductor is undervalued relative to its growth. Micron Technology (MU): Micron Technology is not cheap by traditional measures but that doesn't matter.
When should I buy blue-chip stocks?
During economic slowdowns, investors turn to blue chip stocks to protect their investments.
ï»żTicker | Name | YTD Price Return |
---|---|---|
VST | Vistra Corp | 84.71% |
NVDA | NVIDIA Corp | 80.67% |
APP | AppLovin Corp | 75.01% |
VRT | Vertiv Holdings Co | 68.17% |
S.No. | Name | CMP Rs. |
---|---|---|
1. | Motherson Wiring | 69.60 |
2. | I R C T C | 1057.65 |
3. | Lloyds Metals | 696.75 |
4. | Hindustan Zinc | 431.95 |
- SoundHound AI and Sweetgreen are up 174% and 116% so far in 2024.
- SoundHouse AI is seeing its platform for conversational intelligence explode in popularity.
- Sweetgreen has quadrupled over the past year, but it's still a broken IPO with potential to harvest.
Stock | Market Capitalization | Sector |
---|---|---|
Colgate-Palmolive Co. (CL) | $73 billion | Consumer staples |
Sysco Corp. (SYY) | $41 billion | Consumer staples |
Coca-Cola Co. (KO) | $261 billion | Consumer staples |
S&P Global Inc. (SPGI) | $134 billion | Financials |