Investopedia defines a blue-chip business as, “Stock of a large, well-established and financially sound company that has operated for many years.”
There are no hard and fast rules for classifying companies or stocks as ‘blue chip’, ‘growth’ or ‘dividend’ – nor are they mutually exclusive!
However, personally, I think it’s imperative for new investors to have a majority of their share portfolio invested in quality ‘blue-chip’ companies.
Indeed, later in life regular dividend income from your share portfolio throughout the market cycle will provide financial security for you and your family, allowing you to rest easy at night.
Three rock-solid blue chip stocks for your retirement portfolio
- Telstra Corporation Ltd (ASX: TLS) is the perfect example of a quality blue-chip stock. Its market-leading position in Australian telecommunications and expansion into Asia bodes well for future profit and dividend growth. Whilst I wouldn’t go so far to call it a bargain at today’s prices, its 4.8% fully franked dividend is reliable in this low-interest rate environment.
- Washington H. Soul Pattinson & Co. Ltd (ASX: SOL) is another sound ASX-listed blue-chip company. The conglomerate has interests in major public and private businesses having itself been listed on the ASX for more than 100 years. From pharmacies to telecoms and coal, WHSP appears set to continue rewarding patient shareholders with modest long-term growth and dividends.
- ResMed Inc. (CHESS) (ASX: RMD) is a dual-listed biotechnology company providing sleep apnoea devices to customers around the world. Tilted more towards growth than the two aforementioned companies, the $US8 billion ResMed Inc. still has plenty of exciting opportunities ahead of it. It also offers a quarterly dividend, currently forecast at 1.8% unfranked.
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Motley Fool contributor Owen Raskiewicz owns shares of ResMed Inc. and Washington H. Soul Pattinson and Company Limited.
The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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