NORDSTROM INC. $50 - New York symbol JWN

NORDSTROM INC. $50 (New York symbol JWN; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 208.6 million; Market cap: $10.4 billion; Price-to-sales ratio: 0.9; Dividend yield: 2.0%; TSINetwork Rating: Average; www.nordstrom.com) continues to add new Nordstrom Rack stores, which sell clearance merchandise from the company’s regular stores. That helps it attract cost-conscious shoppers.

The new stores increased sales by 13.2% in the quarter ended April 28, 2012, to $2.6 billion from $2.3 billion a year earlier. Same-store sales rose 8.5%.

Earnings rose at a slower pace of 2.8%, to $149 million from $145 million. Per-share earnings rose 7.7%, to $0.70 from $0.65, on fewer shares outstanding. Nordstrom’s profit margins fell because it introduced new loyalty programs and free shipping to compete with other retailers.

Nordstrom is a buy.

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Blue chip stocks are big, well-established, dividend-paying corporations with strong business prospects. These are companies that also have sound management that should be able to make the right moves to keep competing successfully in a changing marketplace.

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Dividend stocks make cash payouts that serve as a way for companies to share the wealth they’ve accumulated. These payouts are drawn from earnings and cash flow and paid to the shareholders of the company. Typically, these dividends are paid quarterly, although they may be paid annually or even monthly as well.

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One of the sweetest and most profitable pleasures of successful investing is to buy high-quality “value stocks” (or stocks that are reasonably priced, if not cheap, in relation to its sales, earnings or assets), then hold on to them as mainstream investors recognize the value and push up the share price.

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