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Why I think it’s time to sell these ‘safe’ blue chips

One of the older pieces of investing advice is to invest in blue chips and hold them for the reliable dividends they pay.

Some people may have decided to avoid cyclical shares like Commonwealth Bank of Australia (ASX: CBA) and BHP Billiton Limited (ASX: BHP) for more consistent industries like energy and telco utility operators.

But, going for ‘safer’ doesn’t appear to have been the safest choice. Telstra Corporation Ltd (ASX: TLS) shareholders have seen an enormous deterioration of strength of the business.

The same could soon be said of Origin Energy Ltd (ASX: ORG) and AGL Energy Ltd (ASX: AGL). The two energy businesses used to be a simple investment offering: regular customer cashflow every few months.

However, there’s a list of reasons for uncertainty surrounding them these days.

Firstly, their customers are now competition. Every household that installs solar panels means less electricity for the energy giants to sell. Those households could be selling energy back into the system if they generate excess energy. This trend is only going to continue as the cost of solar panels reduces further.

The government wants to put a price cap on electricity prices. This would likely be a good thing for households, however it will almost certainly crimp profits.

That wasn’t the only threat. The government has also threatened forced divestment on the energy sector. However, this seems unlikely with Labor, states and business all not liking that idea.

Foolish takeaway

If I’m going to invest in a large ASX business I want to see that it is good long-term growth potential as well as downside protection.

However, AGL and Origin don’t seem like reliable investments to me at the moment. AGL’s dividend yield of 6.3% is not enough to attract me to it.

If you’re looking for reliable blue chips then one of these top shares could be a much better long-term growth option.

Top 3 ASX Blue Chips To Buy Today

For many, blue chip stocks mean stability, profitability and regular dividends, often fully franked..

But knowing which blue chips to buy, and when, can be fraught with danger.

The Motley Fool’s in-house analyst team has poured over thousands of hours worth of proprietary research to bring you the names of "The Motley Fool’s Top 3 Blue Chip Stocks for FY19."

Each one pays a fully franked dividend. Each one has not only grown its profits, but has also grown its dividend. One increased it by a whopping 33%, while another trades on a grossed up (fully franked) dividend yield of almost 7%.

The names of these Top 3 ASX Blue Chips are included in this specially prepared free report. But you will have to hurry. Depending on demand – and how quickly the share prices of these companies moves – we may be forced to remove this report.

Click here to claim your free report.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra Limited. 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 Scott Phillips.

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