Best Blue Chip Stocks To Trade in 2021
Are you unsure how blue-chip companies and their stocks could impact your investments? Or, perhaps, you're asking yourself, 'what are blue chip stocks?'. This guide offers the overview that you are looking for, as it discusses some blue-chip stocks and outlines the top European and UK blue-chip stocks, high dividend blue-chip stocks, general investments in blue-chip stocks and answers your questions about blue-chip stocks to prepare you for trading in this exciting market.
Table of Contents
- 'Blue Chip' Companies: What, Why and When?
- Investing in Blue-Chip Shares
- Top 10 Blue Chip Shares in 2021 - What blue chip stocks should I look out for?
- What are the Best Blue Chip Stocks to Buy?
- Top European Blue Chip Stocks - What blue chip stocks should I buy?
- Top UK Blue Chip Shares - What blue chip stocks should I buy?
- Top Blue Chip Companies in the Netherlands - What blue chip stocks should I buy?
- Highest Dividend Blue-Chip Shares
- 3 Blue Chip Tech Shares for 2021
- 5 Blue Chip Penny Shares
- 5 Blue Chip Shares Under $10
- 5 High Beta Blue Chip Shares
- NIFTY Blue Chip Shares
'Blue Chip' Companies: What, Why and When?
What are blue chip stocks? Only a handful of companies can be considered as a proper "blue-chip" company or stock. However, before we explain when they "qualify", let us first address the meaning itself.
|A blue chip stock is a large company that is well-established and financially sound, having operated for several years and with dependable earnings. They often pay dividends to shareholders.|
Whether a stock is considered a blue chip may vary from investor to investor, as it depends on their own individual assessment. That being said, there are a couple of criteria that experts agree on.
Here are the three main aspects for analysing whether a company can be considered to be a blue-chip stock:
- Well-known: these companies are (relatively) well-known with the general public or investor, and often considered to be a "household" name.
- Secure: these stocks are relatively safe investments because they tend to perform relatively well during periods of economic booms and busts. The company's finances are also stable.
- Established: these stocks are often included in the major stock market indexes, either in the US, or with other worldwide indexes. It goes without saying that these companies have operated for years and often decades.
The overall main feature of a blue-chip company is its dominance in a particular sector via its large market share and a well-recognized brand. There is no formal list of companies that are recognised as blue-chip stocks, but the 30 stocks in the Dow Jones Industrial Average (DJIA) are often seen as proper examples.
Some of the better-known companies in the DJIA that are mostly considered to be blue-chip stocks include: Apple, Boeing, Caterpillar, Coca-Cola, IBM, Goldman Sachs, Exxon Mobil, Intel, McDonald's, Microsoft, Nike, Visa, Walmart, Walt Disney.
These Blue-chip companies have very high market capitalization levels, which indicate the total value of the company (number of stocks multiplied by current stock price). Market cap levels run into the billions, and may even reach the trillions. Apple in fact was the very first company to reach a trillion Dollar value in 2018, causing major headlines in various news outlets across the world.
Investing in Blue-Chip Shares
Making investments in blue-chip stocks is considered to be (one of) the safest options for investors, due to the companies' dominant market positions, market cap, size, financial position, and solid reputation. Those stocks also often offer stable earnings, stable earning growth (rate of change), stable dividend payments, and sometimes even stable dividend growth.
Some of the best blue-chip stocks have a long track record of paying out dividends to investors. Some investors, such as Ben Graham in his book "The Intelligent Investor", prefer a 20-year payout track record.
All of these advantages make blue-chip stock very appealing for small, medium, and large investors alike. But that does not mean that these are immune to economic downtrends and recessions.
WYATT investment research made a comprehensive evaluation of the stock performance of three large and well-known companies from the US: AT&T, General Electric (GE), and E.I. DuPont (DP).
WYATT compared the performance of these three companies with the overall stock market during the two most famous and largest market crashes in the 20th century, which took place in 1929 and 1987.
DJI +/- -40.0%
Source: Historical stock performance: WYATT Investment Research
As you can see from the table above, the main advantage is that blue-chip stocks are historically more resilient (their losses were smaller) and can recover quicker. For the three stocks mentioned above, it took only two years to return to their initial values after the crash in 1987.
Source: Business Insider. Captured May 13, 2021. This graph depicts the stock market development between 1927 to 1932, including the stock market crash between 1929 to 1932 - Please Note: Past performance does not indicate future results, nor is it a reliable indicator of future performance.
Although blue-chip stocks are more resilient, this does not exclude some companies from exiting the Dow Jones Industrial Average (DJIA) or from new companies entering the list.
Additionally, there are not official publicly known criteria for making this choice. The only available guideline offered by the DJIA committee is that a stock is added when a company has an "Excellent reputation, demonstration of sustained growth, and interest to a larger number of investors."
Some of the most reputable and well-known changes that have occurred in the last 5 years include:
- When Walgreens Boots Alliance replaced General Electric in 2018.
- When Apple replaced AT&T in 2015.
- When Goldman Sachs, Nike and Visa replaced Alcoa, Bank of America, and Hewlett-Packard in 2013.
Are you interested in getting all of this information in an easy-to-follow video format? You can learn what Blue Chip Stocks are, how to trade them and find out professional trader and bestselling author Jens Klatts' Top 3 picks for high dividend blue chip stocks, in the video below:
Top 10 Blue Chip Shares in 2021 - What blue chip stocks should I look out for?
Now, we are going to cover the top 10 blue chips that should be looked out for in 2021.
What are the top 10 blue chip stocks to buy in 2021? There is no shortage of advice when you search for the best blue-chip stocks. Although these lists are interesting pieces of information and offer valid starting points for your research, it is certainly not recommended to blindly follow the advice of a top five or ten list.
The best course of action is always to conduct your own thorough research. In addition, it is best if this research is based on a list of criteria that you deem critical for a well-balanced investment portfolio or trading approach.
That being said, there are plenty of ways to find recommendations when searching the internet.
Here's our list of 10 blue chip stocks for 2021 that may be worth considering:
- Johnson & Johnson (JNJ): One stock that could be one of the best blue chip stocks for 2021 is this health care and consumer goods company, Johnson & Johnson. The company was founded in 1886 and has offered a healthy stock for decades. In fact, rating agencies have assigned a perfect AAA rating to its debt, which suggests an incredibly low risk of default. Johnson and Johnson is worth around $400 billion and pays a 2.6% dividend. That's more than twice the rate of U.S. 10-year Treasurys. This can be considered a high dividend blue chip stock. Analysts predict its earnings per share (EPS) will increase by about 12% in 2021.
- Berkshire Hathaway (BRK.B): This is the largest company on our list. Berkshire Hathaway grew to wide recognition under the well known investor Warren Buffet. It is now worth $530 billion. Berkshire is comparable to Johnson and Johnson in terms of stability. The company has holdings in insurance (Gen Re, GEICO and others), railroads (BNSF Railway Co.), utilities and other industries. It seems as if the entire world economy would have to crash to hurt Berkshire's sturdy position.
- JPMorgan Chase & Co. (JPM): JPMorgan is the largest bank in the United States. The company is worth $360 billion and pays a 3% dividend and currently uses less than 47% of its profits in doing so. Low interest rates have hit the banking industry hard, but JPMorgan has seen some rewards as market activity increased in 2020. Their trading revenue increased 30% year-over-year in the third quarter.
- 3M (MMM): 3M was founded in 1902. It is also a stable and well-diversified company. They are an industrial giant, making respirators, automotive parts, personal protective equipment and other technology for other integral sectors of the economy. They aim to earn 30% of revenue from products they introduced within the past four years and permits employees to dedicate 15% of their paid time to working on personal projects. MMM pays a 3.4% dividend.
- AbbVie (ABBV): AbbVie rose about 17% on the year up to mid-December. This took place as the markets were correcting its 2018 and 2019 sell-off that was partially driven by their $63 billion purchase of Allergan, a Botox-maker. AbbVie is also a high dividend blue chip stock, paying a handsome 4.9% dividend. AbbVie has several billion-dollar drugs, including Skyrizi for plaque psoriasis treatment and Imbruvica for cancer.
- The Walt Disney Co. (DIS): This $270 billion entertainment company experienced struggles in 2020 as it closed parks and cruises as a response to the pandemic. As parts of the world begin recovering, those sectors could return to normal in the coming years. Additionally, they launched its Disney+ streaming platform just before the pandemic, in 2019. Disney has accumulated 86.8 million subscribers since then and expects its number of subscribers to triple by 2024, which exceed the number of Netflix (NFLX) subscribers. Disney's portfolio includes old content, intellectual property, ownership of Marvel, Lucasfilm and Pixar, making it attractive to some long-term investors.
- AT&T (T): AT&T is a high dividend blue chip stock. It pays a 6.8% dividend. This is the highest dividend payment of every company on this list. AT&T has a net worth of $266 billion. It is also a leading member of the U.S. telecom oligopoly with T-Mobile US (TMUS) and Verizon Communications (VZ). T owns Warner Media. With its HBO Max streaming asset, it could experience growth as Warner Bros. studio releases all of its theatrical releases through this streaming channel, potentially generating more subscribers.
- Cisco Systems (NASDAQ:CSCO). Over the last years, Cisco continued to add new capabilities to its services platform and recently unveiled new conversational Artificial Intelligence to its interfaces. Adding in continued data centre demand as well as the pending 5G upgrades, makes Cisco an interesting look.
- Merck (NYSE:MRK). After a few years ago, Merck focused more on newer biotech and advanced cancer-fighting medications. This move turned out to have been the right one. Merck's Keytruda has become one of the go-to medicines for a variety of lung cancers with significant growth rates.
- American Express (NYSE:AXP). Amex is interesting due to its focus on the higher end of the credit spectrum which removes many of the uncertainty and issues with offering loans and where reducing default rates could play a significant role over the midterm with debt significantly increasing, especially in the US.
What are the Best Blue Chip Stocks to Buy?
Perhaps you've been asking yourself, 'What are the best blue chip stocks to buy?'. It’s impossible to say with certainty. Many traders are interested in the stocks above because they have been established, industry leading stocks for many decades and still are today.
One of the benefits of investing in blue chip stocks are the dividend payouts some of these companies pay to their investors, which is another reason blue chip stocks in the UK, Netherlands or elsewhere in the world are attractive to investors. However, remember that any company’s dividend policy is subject to change and their dividend payments, alone, shouldn’t be the main criteria for making a financial decision.
Top European Blue Chip Stocks - What blue chip stocks should I buy?
The second blue chip stocks list we present here are those from Europe. The European equivalent of the Dow Jones Industrial Average could be considered the Dow Jones EURO STOXX 50 index. This list could represent the most well-known European blue chip stocks. The index covers Europe in general, the Eurozone, and Eastern Europe.
The top 15 companies of the Dow Jones EURO STOXX 50 are listed in this blue chip stocks list below. The sequence is decided by the weight it has in the index:
- AB InBev
Nobody knows for sure whether these companies will remain in the top 15 a few years from now, or whether all of these firms will manage to sail through rough financial and economic storms without damage.
What can be said is that these European blue chip stocks are mature, well-known, and industry leaders. Also as a trader, these stocks tend to have lower volumes and greater price volatility, which in turn opens up the door for more trading opportunities.
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Top UK Blue Chip Shares - What blue chip stocks should I buy?
The next blue chip companies list featured in this article are those from the UK. Some traders consider UK blue chip stocks to also be European blue chip stocks. UK blue chip stocks are listed on the FTSE 100 Index, which is an abbreviation for the Financial Times Stock Exchange. It consists of 100 companies and is based on the highest capitalised firms within the UK.
Here is a blue chip stocks list of ten companies that are typical examples of blue-chip stocks from the UK:
- Legal & General (LGEN)
- Royal Dutch Shell (RDSA)
- Unilever (ULVR)
- Rio Tinto (RIO)
- Total (TOT)
- Berkeley Group (BKG)
- Aviva (AV)
- AstraZeneca (AZN)
- Reckitt Benckiser (RB)
- HSBC (HSBA)
Like we said about the list of European blue chip stocks above, it's difficult to say for sure whether these companies will remain in the top 10 list of blue chip companies in the UK several years from now, or whether all of them will manage to survive these rough financial and economic conditions without damage. But we can say that these UK blue chip stocks are mature and leading their industry.
Top Blue Chip Companies in the Netherlands - What blue chip stocks should I buy?
The primary stock index in The Netherlands is the AEX Index (Amsterdam Equity Index). It consists of the top 25 most actively-traded equities that are traded on the exchange.
Well before other nations in Europe, the Dutch undertook many facets of Capitalism, such as speculation. One well-known example of Dutch speculation is the tulip mania of the 17th century. In that time, the price of rare tulip bulbs soared higher than the cost of a house.
Today, several world-renowned companies such as Royal Dutch Shell (RDS.A), Philips (PHG) and others are based in The Netherlands. Here is our list of blue chip companies in the Netherlands:
- Unilever NV (UN) Dividend Yield: 1.40%
- ArcelorMittal (MT) Dividend Yield: 1.56%
- Royal Dutch Shell (RDS.A) Dividend Yield: 5.39%
- Koninklijke KPN (KKPNY)Dividend Yield: 3.75%
- Philips Electronics (PHG) Dividend Yield: 3.04%
- Unibail- Rodamco (URW)
- Akzo Nobel (AKZOY) Dividend Yield: 1.33%
- Koninklike Ahold (ADRNY) Dividend Yield: 1.72%
- ING Groep (ING) Dividend Yield: N/A
- ASML Holding (ASML) Dividend Yield: 0.76%
Some of these blue chip companies in the Netherlands offer particularly high dividends, which is another reason some investors are attracted to investing in them.
Highest Dividend Blue-Chip Shares
Are you specifically searching for high dividend blue chip stocks? There is also plenty of advice that can be found on the internet on this topic. However, it is always important to conduct proper analyses for each blue-chip stock, especially when looking for higher returns on dividends.
A high dividend blue chip stock may have lower stock price growth, but there are a few high dividend blue chip stocks that manage to offer an interesting combination, whereby decent dividend rates are paired with decent growth rates. Here are four high dividend blue chip stocks that managed to beat the odds.
1. Zoetis (ZTS)
An animal drug and vaccine producer:
Dividend yield: 0.53%
Dividend growth rate: 19.4%
Annualized gain: 8.25%
2. UnitedHealth (UNH)
A health insurance provider:
Dividend yield: 1.23%
Dividend growth rate: 20.7%
Annualized gain: 46.45%
3. Mastercard Inc. (MA)
A payment processor:
Dividend yield: 0.47%
Dividend growth rate: 24%
Annualized gain: 5.23%
4. Nvidia (NVDA)
A semiconductor manufacturer:
Dividend yield: 0.11%
Dividend growth rate: 10%
Annualized gain: 19.7%
Source: Dividend growth rates and year to date price gains are up to January 21, 2021. Dividend growth rates are an average of annual increases over the past 5 years.
3 Blue Chip Tech Shares for 2021
It's time we offer a blue chip companies list for those interested in tech shares. The S&P 500 earnings forecast for 2021 appears strong. Additionally, low interest rates in the United States and elsewhere should give stocks a boost for the immediate future.
This means investors are likely interested in adding stocks to their portfolios in 2021. One of the best ways for long-term investors to enhance their portfolio is via large-cap, proven companies that offer exposure in rapidly growing industries. In other words, investing in blue chip tech stocks:
- Nvidia NVDA: Nvidia has taken off with 1,500% growth over the past five years, leaving Amazon AMZN, Apple AAPL, and other tech companies behind, becoming the biggest U.S. chipmaker by market cap ($326 billion). NVDA was trading at $315 in February 2020, before the coronavirus outbreak and is currently up 65% from that level.
- Salesforce CRM: Salesforce stock has been gradually falling since late 2020. Much of its downturn around late 2020 and early 2021 was based on its $28 billion deal to buy Slack WORK - the second-largest software deal in history. Some specialists suspect that CRM overpaid for the work-centred communication company. However, CRM’s executive team believes Slack will likely prove to be a vital component of the digital-centred business arena.
- Microsoft MSFT: Microsoft shares were neck and neck with Apple and Amazon over the last five years. However, it fell behind both of them in 2020. MSFT was up about 40% vs. the 80% gains of its tech giant peers. At the same time, MSFT has never been in such an influential position as it is today as it expands in the skyrocketing cloud market. In Q1, 2021, MSFT's server products and cloud services revenue rose $2.0 billion, or 22%, driven by Azure. Azure revenue increased 48% due to growth in their consumption-based services. The pandemic also put MSFT's remote work platform under the light, which is competing against Zoom Video ZM.
5 Blue Chip Penny Shares
If you are looking for blue chip penny stocks, you will have a difficult time finding one. Penny stocks are usually small company stocks that often trade for under $5. Because of this fundamental difference, you will have a very difficult time finding the best blue chip penny stocks. And remember that the best stock is relative and will differ from trader to trader.
5 Blue Chip Shares Under $10
The next blue chip stocks list this article offers is a list of those trading for around $10. Because blue chip shares are from strong, well-known, established and secure companies, it can be challenging to find blue chip stocks trading under $10 per share. While the following may not qualify for the blue-chip title, they are stocks that are traded for less than $10:
- Glu Mobile (GLUU): You may have never heard of Glu Mobile, but you may know its family of mobile games like Walt Disney's (DIS) "Kim Kardashian: Hollywood" and "Sorcerer's Arena". Impressive performance in 2020 alongside a positive outlook for 2021 makes it a popular stock for 2021. In the third quarter of 2020, Glu's revenue increased 48% year-over-year to $158.5 million. Their revenue and net income set a quarterly record. Glu received a 22% rise in bookings through the third quarter, allowing the company to pass its goal of $428 million in bookings in 2020. The company registered $435.8 million in bookings in three quarters. It's currently trading at around $12.50 per share.
- Zynga (ZNGA): While "Farmville" was discontinued in late 2020, Zynga appears to have a positive future ahead. This game-maker set its roots in Facebook (FB) years ago, with a focus on mobile games such as the new "Harry Potter: Puzzles and Spells". Zynga is currently the biggest mobile gaming company by market share. It's currently trading at $10.30 per share.
- Sirius XM Holdings (SIRI): SIRI experienced a 15% fall in their share price over the past year, however, they've already seen improvements in specific areas. For example, while Sirius' advertising revenue dropped 34% in the second quarter of 2020, it was down only 6% year-over-year by the third quarter. Meanwhile, their subscriber churn remained unchanged year-over-year at 1.7%. This suggests that Sirius' is keeping its customers. As vaccinations are starting to slow the spread of coronavirus, allowing people to get back out on the road, car sales are rising, which will directly affect Sirius. They may be in a good position for a comeback.
- Nokia Corp. (NOK): Last year started well for Nokia the company began assisting with 5G rollouts in Western countries and shares steadily climbed through August. Its situation took a turn for the worse when Nokia lost to Samsung on a $6.64 billion contract for installing and maintaining 5G equipment for Verizon Communications (VZ). Since then, the company has seen a gradual drop in its share price. However, its price began to level out in February 2021, and the new CEO has a plan to turn the situation around. While the changes in its share price may be slow, its low share price may present a good opportunity for investors. At the time of writing, NOK is trading at $4.97. These ideas won't change the company's fortunes overnight, but it's a start – and with shares this cheap, it won't cost investors much to take a chance on Nokia.
- Casper Sleep (CSPR): Casper Sleep has closed stores and lost 41% of its share price throughout the coronavirus epidemic. However, Casper's management believes the worst may be behind. They opened 17 new stores in the third quarter of 2020 while expanding retail partnerships and experiencing a 28.3% rise in revenue. Earnings before interest, taxes, depreciation and amortization, or EBITDA, loss recovered 55% year-over-year as Casper Sleep has been returning closer to profitability. At the time of writing, CSPR is trading at $8.58
5 High Beta Blue Chip Shares
Since volatility is an important component of trading and investing, some traders seek out high beta blue chip stocks.
This is how to read the beta of a stock:
- A 1.0 beta means a stock fluctuates equally with the S&P 500
- A 2.0 beta means a stock fluctuates twice as much as the S&P 500
- A 0.0 beta means a stock's fluctuation doesn’t correlate with the S&P 500
- A -1.0 beta means a stock fluctuates in the exact opposite manner as the S&P 500
Here are 5 high beta blue chip stocks:
- Booking Holdings (BKNG): Booking Holdings offers online travel services. They are a giant in this industry and with a large-cap stock and market capitalization of $100 billion. They offer services to local partners and consumers in 220 + countries. The company's brands include Booking.com, Agoda, Priceline, KAYAK, Rentalcars.com, and OpenTable. Last year was difficult for Booking Holdings, as the coronavirus hurt the travel industry and its related services. However, a steady global recovery will create a positive outlook for the company. Their 5-year Beta score is 1.48.
- Micron Technology (MU): Micron Technology offers storage and memory solutions in DRAM, NAND, and NOR products. They have a market capitalization of $100 billion and saw revenues increase 30% year over year in the recent quarter. Their 5-year Beta score is 1.52.
- Applied Materials (AMAT): Applied Materials is a major player in the semiconductor industry. Their first-quarter earnings on February 18th, 2021, beat expectations. Their Q1 results registered records for their first quarter in both adjusted profit and revenue. Their stock's 5-year Beta value is 1.65.
- Lam Research Corporation (LRCX): Lam Research Corporation is a giant of the semiconductor industry and a major supplier of wafer fabrication equipment. The company saw a 9% increase in revenue year-over-year In the most recent fiscal quarter. In the first half of FY 2021, the company's net income increased 73% next to that of 2020. The company provided guidance calling for revenue of $3.7 billion for the third quarter, FY 2021. Their stock's 5-year Beta value is 1.72.
- The Boeing Company (BA): The Boeing Company is the globe's biggest commercial jet manufacturer. They were founded in 1916 and in the past 100+ years, they have gone from producing wood and canvas aeroplanes to making today's most advanced planes. The impact of the coronavirus pandemic on the travel industry has left Boeing in a challenging operating environment. However, the company has seen some promising signs of change. While there may not be strong enough signs that the company is on the way to a turnaround, as parts of the world are gradually recovering from the coronavirus pandemic and travel restrictions begin to lift, it may be a company that investors are keeping an eye on. Their stock's 5-year Beta value is 2.01.
NIFTY Blue Chip Shares
Below is a list of top NIFTY blue chip stocks on India's NIFTY 50 index. These are the top gainers on May 10, 2021:
- Coal India
- UPL Ltd.
- GAIL (India) Ltd.
- Divid Laboratories Ltd.
- Tata Steel Ltd.
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This material does not contain and should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments. Please note that such trading analysis is not a reliable indicator for any current or future performance, as circumstances may change over time. Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks.