2 cheap blue-chip stocks to juice your retirement portfolio

Take advantage of short-term setbacks and build up your future wealth.

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Blue-chip stocks are the large-cap stocks that investors would love to have a pile of in their portfolios because they pay handsome dividends and have a strong track record of growth.

If you are looking for long-term income, you want to make sure it is steady and growing. That’s what these two blue-chips have to offer. As market leaders, they will keep on going well into the future. Right now, though, both have experienced some setbacks, so the market has cooled on them. When the market lowers its interest, then you should raise yours.

BHP Billiton Limited (ASX: BHP), the $116 billion mining company, has been cutting costs and jobs while it continues to talk up the long-term strength in iron ore demand. Its PE is 12 and it offers a 3.5% dividend yield.

The company’s plan to sell down non-core assets outside of iron ore, copper, petroleum and coal will be good for its long-term financial strength, but the market is focusing on the immediate future.

This is where you have to be a little contrarian in your thinking. If you are going to buy a cyclical stock, then it is best to do it well before that industry becomes hot again. BHP is a quality blue-chip stock that has gone through a number of mining booms and busts and is still here, tripling its share price in the last ten years.

AGL Energy Ltd (ASX: AGK), energy producer and electricity utility retailer, has a 4.1% dividend yield and a 15 PE ratio. Currently, it  wants to acquire the power generating utility company Macquarie Generation, which is a NSW state-owned asset up for sale. MacGen generates about 13% of the electricity needed in eastern Australia.

The ACCC has blocked the sale under concerns the acquisition would give too much pricing power and industry consolidation to AGL Energy. The company is already one of the biggest electricity providers in the eastern states.

Creating new utility assets on such a scale would be prohibitively expensive. If AGL can win its appeal on the ACCC’s decision, it would be a great plus for long-term growth and earnings.

Motley Fool contributor Darryl Daté-Shappard does not own shares in any company mentioned. 

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

asx share price competitions represented by businessmen arm wrestling
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

person reading news on mobile phone
⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »