The root of the term “blue chip” stems from the game of poker, as the blue chips represent the highest value. Investing in blue chip stocks can give you an additional measure of safety in today’s turbulent markets.
Pat McKeough believes investors will profit most, and with the least amount of risk, by putting the bulk of your stock portfolio in shares of blue chip companies—those that are well-established, with strong balance sheets and steady earnings and cash flow. These are companies that have bright prospects in healthy and growing industries.
The best blue chips offer both capital gains growth potential and regular dividend income. The dividend yield is certainly one of the most concrete indicators of a sound investment. It is the percentage you get when you divide the current yearly dividend payment by the share or unit price of the investment. It’s an indicator we pay especially close attention to when we select stocks to recommend in our investment newsletters.
We feel most investors should hold the largest part of their investment portfolios in securities from blue chip companies. All these stocks should offer good “value”—that is, they should trade at reasonable multiples of earnings, cash flow, book value and so on. Ideally, they should also have above average-growth prospects in expanding markets.
Meanwhile, when investing in any type of stock, at TSI Network we recommend using our three-part Successful Investor strategy:
1-Invest mainly in well-established companies;
2-Spread your money out across most if not all of the five main economic sectors (Manufacturing & Industry; Resources & Commodities; Consumer; Finance; Utilities);
3-Downplay or avoid stocks in the broker/media limelight.
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Like TD, the remaining four banks trade at attractive multiples to their improved earnings; each should also continue to increase its dividend....
Unlike Canada, the U.S. has hundreds of smaller banks. TD’s strong earnings put it in a position to keep adding more of those firms to its American operations....
In March 2014, the company purchased the Shoppers Drug Mart chain, which operates 1,330 drug stores across Canada.
Effective February 1, 2018, the company will merge the PC Plus loyalty rewards plan at its Loblaw supermarkets with the Shoppers’ Optimum program....
Nissan’s shares are down only 9% from the two-year high they hit in earlier September because the re-inspections are finding no safety issues....
TD continues to expand in the U.S.; that country now supplies 31% of its total earnings.
The bank and 42%-owned TD Ameritrade (Nasdaq symbol AMTD) recently completed their acquisition of Scottrade Bank....
The bank is reportedly looking to sell ScotiaMocatta, its U.K.-based gold and precious metals trading business....
CP also continues to expand its reach, particularly in the U.S. That has helped minimize the impact of its high exposure to volatile commodities such as grains, crude oil and minerals.
Even after their recent surge, CP’s shares are still attractive in relation to the company’s projected earnings....
CP continues to move up steadily toward its all-time high of just over $242 per share....