Tips on selecting your best blue-chip stocks for long-term investment growth

best blue chip dividend stocks

Find the best blue-chip stocks for long-term investment success by selecting high-quality shares with a history of paying a dividend

In general, blue-chip stocks we recommend have a history of sound earnings and, in most cases, dividends. They have established their value over the long term. Like all stocks, they can fluctuate in price and will also likely suffer along with other shares in a long-term market downturn, but they offer a higher probability of long-term gains.

In a deep or long-lasting market setback, your best blue-chip stocks for long-term investment success will tend to go down, along with everybody else’s. But we think they will go down less and recover sooner.

True Blue Chips pay off

Learn everything you need to know in 'The Best Blue Chips for Canadian Investors' for FREE from The Successful Investor.

Canadian Blue Chip Stocks: Bank of Nova Scotia Stock, CP Rail Stock, CAE Inc. Stock and more.

Your best blue-chip stocks for long-term investment portfolio success require patience for you to get the best results

It’s all too easy to sell a blue-chip investment that looks like it’s headed for a downturn, only to buy another stock that is headed for a collapse. For that matter, if you make a habit of selling whenever you feel the market’s risk has gone up, you will wind up selling your best stocks way too early.

You can always find a rationale for selling. Market commentators are continually thinking up new ones, based on recent market strength or weakness, historical market patterns, political or economic predictions, changes in tax policies—the list is endless. This is a good thing. After all, you can only buy a stock if somebody who owns it wants to sell.

Before you act on a selling rationale, take a broader look. Consider all the facts about the blue-chip investment, and about your investment goals and temperament. If the selling rationale makes sense and you find additional good reasons to sell, then selling may be the right thing to do. But it’s always a bad idea to sell a good stock for trivial or transitory reasons.

Learn how to pick the best blue-chip stocks for long-term investment portfolio growth

We advise investors to look for blue chip companies that are likely to pay off if business and the stock market are good, but that won’t hurt them too much during those inevitable periods when business or the markets are bad.

If you follow two of the main pillars of our approach—diversifying across most if not all of the five main economic sectors, and sticking mainly to well-established companies—you will have a better-than-average chance of long-term gains in excess of what you’d get with any other investment approach.

If a deep or long-lasting market setback does occur, any aggressive stocks you own are likely to fall more than shares of blue chip companies. The eventual recovery of aggressive stocks is also less certain. That’s why we recommend that you hold the bulk of your investment portfolios in securities from blue chip companies.

Bonus tip: Use a portfolio-building plan that consistently works and you can join the ranks of Successful Investors

A sound portfolio plan helps you build up capital over the course of your investing career, and also helps you make the most of that capital in retirement.

Our Successful Investor financial plan is the best overall plan we know of:

  • Hold mostly high-quality, dividend-paying stocks.
  • Spread your money out across most if not all of the five main economic sectors: Manufacturing & Industry, Resources & Commodities, Consumer, Finance and Utilities.
  • Downplay or stay out of stocks in the broker/media limelight.

To make the most of our Successful Investor financial plan, you should put yourself on an investing regimen. Start saving as early in your working career as possible. Each year, set aside a fixed sum to invest. It’s important to continue investing the same sum (or raise it) through good years and bad.

The same sum buys more shares in “bad” years, when prices are low. It buys fewer shares in good years, when prices are high. This cuts your long-term average cost per share.

This plan lets you profit from market volatility. That’s because you’ll automatically buy more shares when prices are low, and fewer shares when prices are high.

In retirement, you reverse the process. You live off your dividends, and sell stocks mainly when you need more money. When you do that, you sell your lower-quality holdings first. That way, you upgrade the quality of your portfolio every time you sell any of your stocks.

Outside of blue chip stocks, what stocks do you feel offer long-term investment appeal?


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