With so much uncertainty in the world right now, companies that offer steady returns and reliable cash flows are looking more and more attractive to investors with each passing day. It can really pay off to add a few blue-chip stocks to your portfolio that you know you can count on. These are stocks that won’t necessarily generate outsized returns in the short-term, but what they can do is provide income and safety to your portfolio over the years if you stick with them.
A blue-chip stock is generally considered to be a large established company that is financially sound and generates consistent earnings. They typically pay dividends and are leaders in their respective industries. While no company is invincible, investors tend to view blue chip companies as lower-risk investments that are able to survive challenging economic periods thanks to their financial stability. That’s why they are an attractive option at this time. Here are 3 blue chip stocks to buy with reliable dividends:
The first blue chip stock on our list is Home Depot, a company that has seen its sales surge this year thanks to low mortgage rates and people focusing on home improvement projects during the pandemic. Home Depot operates a chain of 2,293 retail warehouse stores and sells home improvement products out of its large stores that come in at an average of 130,000 square feet. While many brick-and-mortar retailers have slowly withered away thanks to the convenience of companies like Amazon (NASDAQ:AMZN), Home Depot continues to experience strong momentum. Since it sells products that customers typically want to check out physically before buying, there will likely always be a need for Home Depot’s stores.
Home Depot saw its net sales increase by 23.4% year-over-year in Q2 to $38.1 billion. Net earnings grew by 24.5% year-over-year in Q2 as well. While these numbers likely received a boost thanks to the strong demand for home improvement products during the pandemic, there is still room for growth. The company plans to expand abroad into countries like Mexico and should continue to see strong sales momentum thanks to a favorable housing market. It has also invested in additional sales channels such as e-commerce that have already started to pay off. Over the last 5 years, Home Depot has returned $59 billion to shareholders via share repurchases and dividends. The stock currently offers a 2.17% dividend yield and is one of the best blue chip companies out there.
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