As investors we're always looking for investments that will provide us the most return for the least amount of risk. This usually ends up with dependable blue chips being the choice for many people, which isn't a bad thing.
Blue chips have already shown they can weather an economic crisis (the GFC), make large profits every year and reward shareholders with big dividends.
The best blue chips are the ones that still have plans and options for growth because this means the dividend and share price are likely to grow too.
Here are two of my favourite of the big blue chips:
Crown Resorts Ltd (ASX: CWN)
Crown Resorts is Australia's largest operator of casinos and hotels, with a market capitalisation of $8 billion.
The recent controversy over Crown employees and the subsequent drop in the share price was because of alleged marketing by Crown to Chinese VIPs to come to Australia and gamble. This goes against Chinese laws as companies are only allowed to advertise hotels and destinations.
I think the drop in share price is a good opportunity to buy Crown shares at discounted prices. Crown is priced as though it will lose most of the VIP gaming revenue, when this only affects Chinese VIP gaming.
Crown has a number of value-creating opportunities in the works. It's building a large casino in Sydney called the Barangaroo project which could significantly add to revenue. It's also building another Crown hotel at its Melbourne complex.
Crown also has plans to create a real estate investment trust with some of its buildings, which may be launched later this year. This would unlock value for Crown to use that cash on some of the above projects.
Crown is trading at 20x FY17's estimated earnings with a trailing, partially franked dividend yield of 6.5%.
Macquarie Group Ltd (ASX: MQG)
Macquarie is Australia's largest listed investment bank with a market capitalisation of $28.5 billion.
It's the only major bank on the ASX to have a majority of its earnings from overseas, with 68% of revenue being sourced internationally.
Macquarie has changed fairly substantially since the GFC, it's reduced its 'cyclical' businesses and focused more on what it calls 'annuity-style businesses' such as aircraft leasing.
There's also a strong chance that Trump's policies do make for a generous environment for businesses in America, which could give Macquarie a big boost as a decent portion of earnings come from that area.
Macquarie is trading at 13.7x FY17's estimated earnings with a partially franked dividend yield of 5.15%.
Foolish takeaway
I think both of these blue chips could provide a dependable source of income and capital growth over the long term, though Crown seems to be a little bit more of a bargain. For more great blue chips for your portfolio, you should read this report.
