Friday, 7 November 2014

Blue Chip Stocks for Dividend Income in 2015

What Are Blue Chip Stocks?

Blue Chip stocks are huge, high quality companies normally with a global reach. They are usually well established companies and household names with strong financial backing. This often means they are more secure in times of poor economic conditions and hold their value better than smaller stocks and shares as the dividend income becomes more valuable.
As blue chips are usually established companies they will normally make consistent profits and often pay out a portion of these profits to their shareholders and investors. This is known as a dividend. Why? It attracts investors looking for income and they may have fewer opportunities to re-invest earned income therefore reward investors with the dividend income payment.

What to look for?

When deciding which dividend paying blue chip stocks to buy you should take into account a number of factors including if the dividend payout is sustainable in the long term and the effect the dividend payments have on the price of the shares. You should look at a few points in particular when trying to find dividend income: 

Is the company still growing?
Earnings per share (EPS) over 5/10 years is a good indicator of of a companies growth, if earnings have continued growing you can be reasonably assured the dividend income is sustainable. An increase in earnings should be backed by an increase in revenue. In particular look for consistent growth in the dividend income payouts year by year.
Check trailing dividend yields
Sometimes a stock will pay a one-time dividend higher than normal. They may not repeat it. Look at the previous dividends paid and see if the trend is stable or increasing. If the dividend is a one off payment or is decreasing then it may be a better idea to look for dividend income elsewhere and a different opportunity.
Make Sure some earnings are retained
If a company distributes all of the profit as dividend income it has nothing left to continue building the business. This results in the lack of potential future growth of the company thus you may lose out on an increase in the value (capital gain) of the stock / share that you hold. It may also mean companies dipping into previous undistributed earnings to maintain the dividend levels. Another warning sign that the income is unsustainable.

Some stock ideas:
Below are a list of 20 Blue Chip stocks and shares you may wish to consider adding to your portfolio for dividend income and long term capital growth. They are ranked in no particular order:
Royal Dutch Shell - Energy 
HSBC - Financials
Roche - Health Care
Total - Energy
Sanofi - Health Care
BP - Energy
Unilever - Consumer Staples
British American Tobacco - Consumer Staples
AstraZeneca - Health Care
Siemens - Technology
Woodside Petroleum - Energy
BAE Systems - Industrials
AT & T - Technology
Lockheed Martin Group - Industrials
Johnson & Johnson - Health Care
Microsoft Corp. - Technology
Merck & Co. Inc. - Health Care
TJX Cos. Inc. - Retail
Amlin - Financials
Carillion - Construction
As always if you want specific advice based on your personal situation regarding the suitability of these investments for you then please contact me directly.
Have a great day! Andrew Lumley-Holmes

No comments:

Post a Comment