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Blue-chip dividend stocks

5 Best Blue-chip Dividend Stocks for 2020

Blue-chip dividend stocks are the best investments within the equity asset class because they provide continuous income to shareholders.  Moreover, they are less volatile and have a sustainable business model. 

When a company decides to sell its shares on the secondary market via an initial public offering (IPO), those buyers become part owners of the company. When investors buy company stocks, they expect to make money either through dividend payout from the company or stock appreciation.

A dividend is the sharing of the company’s profits with all its owners. Numerous companies borrow money to pay out dividends, but that’s a topic for a different article.

More than a decade after the worst financial crisis since the Great Depression, investors are still hunting for yields.  When they find it often comes with severe idiosyncratic risk. 

The cardinal rule of investing is still valid.  Investors have to have a higher risk tolerance if they want higher investment returns.  However, the risk and return tradeoffs have been unbalanced lately. Investors have been asking to absorb a high level of risk to get returns similar to benchmark indices.

The question remains, is there an avenue where investors can absorb market-level risk, get decent returns, and sleep well at night. The answer is blue-chip dividend stocks.

Blue-chip dividend stocks might go up a few basis points during trading hours.  They are not the talk of finance shows such as Mad Money, Squawk Box, and others. The more volatile the stock, the more coverage it gets on those finance shows.  Here are the five best blue-chip dividend stocks for 2020

The Coca-Cola Company

At nearly 30, the price-to-earnings ratio (PE) is high for a beverage company, but the largest nonalcoholic beverage company in the world has been paying dividends since 1920. The PE ratio is the price investors are willing to pay for $1 of a company profit.  

When you buy Coca-Cola’s stock, your stream of income is somewhat guaranteed. Their dividend yield is about 3.26 percent. 

Bank of America Corp

Bank of America is one of the world’s premier financial institutions. It has more than 2.3 trillion in assets. Its dividend yield is about 2.5 percent.

The Home Depot Inc

Mortgage applications have been rising year over year since 2012.  The world’s largest home improvement specialty retailer has been benefiting from the growth greatly.  Its current dividend yield is about 2.5 percent.

McDonald’s Corporation

McDonald’s is the most recognizable fast-food restaurant in the world. Investors who buy the stock gets more than Big Mac; its dividend yield is about 3 percent.

Digital Realty Trust Inc

Digital Realty Trust is different from Coca-Cola or Bank of America, but its business model fits for today’s cloud-based business environment. As of this writing, it operates 200 data centers worldwide and has more than 30 million rentable square feet. Its dividend yield is about 3.2 percent.


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