Blue chip stocks are a vital element to any portfolio given their ability to withstand economic headwinds as well as their solid and reliable dividend yields.
Over the past decade it has been companies like Commonwealth Bank of Australia (ASX: CBA), Woolworths Limited (ASX: WOW) and CSL Limited (ASX: CSL) which have delivered enormous gains. They have jumped 149%, 210% and 825% respectively – and that’s not even including dividends.
However, while it appears any future growth is already priced into those companies’ shares, which blue chip stocks should investors target today?
- Unlike each of the companies mentioned above, Coca-Cola Amatil Ltd (ASX: CCL) has heavily underperformed the market over the last 10 years with a return of just 29%. In comparison, the S&P/ASX 200 Index (Index: ^AXJO) (ASX: XJO) has risen 53%. Things are by no means hunky-dory for the beverage manufacturer – the company is suffering from declining profits and concerns over changing consumer health trends. However, it is because of these issues that Coca-Cola is such a good buy today. I have strong faith the management team can turn it around and deliver stellar returns in the long run.
- Embattled insurance giant QBE Insurance Group Ltd (ASX: QBE) is also a good bet for today’s money. Although it has recently developed a reputation as a serial underperformer, the consensus forecast suggests the company could be in for a solid few years, partially thanks to its exposure to the recovering US economy. The stock is currently trading for $11.08 on a projected P/E ratio of just 10.9 and offers a trailing 3.6% fully franked dividend yield.
- Another solid bet for the coming decade is global packaging giant Amcor Limited (ASX: AMC). After demerging its Australasian and Packaging Distribution Group Orora Ltd (ASX: ORA) late last year, the company can now focus on its operations in emerging economies offering far greater growth potential. Given that the company has grown sales at a compound rate of 18% annually over the last 13 years in this division, it’s a safe bet to continue delivering solid returns.
A massive GROWTH opportunity!
Coca-Cola Amatil, QBE Insurance Group and Amcor are all solid bets for the coming years but they are certainly not new and exciting growth ideas – after all, they would each be on the radar of every seasoned investor!