2021 Blue Chip Stocks List | 260+ Safe High Quality Dividend Stocks

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2021 Blue Chip Stocks List | 260+ Safe High Quality Dividend Stocks


Updated on April 12th, 2021 by Bob Ciura

Spreadsheet data updated daily

In poker, the blue chips have the highest value. We don’t like the idea of using poker analogies for investing. Investing should be far removed from gambling. With that said, the term “blue chip stocks” has stuck for a select group of stocks….

So what are blue chip stocks?

Blue chip stocks are established, safe, dividend payers. They are often market leaders and tend to have a long history of paying rising dividends. Blue chip stocks tend to remain profitable even during recessions.

At Sure Dividend, we define blue chip stocks as companies that are members of 1 or more of the following 3 lists:

You can download the complete list of all 260+ blue chip stocks (plus important financial metrics such as dividend yield, P/E ratios, and payout ratios) by clicking below:

 

Click here to download your Excel spreadsheet of all 260+ blue chip stocks, including metrics that matter like dividend yield and the price-to-earnings ratio.

In addition to the Excel spreadsheet above, this article covers our top 7 best blue chip stock buys today as ranked using expected total returns from the Sure Analysis Research Database.

Our top 7 best blue chip stock list excludes MLPs and REITs. The table of contents below allows for easy navigation.

Table of Contents

The spreadsheet and table above give the full list of blue chips. They are a good place to get ideas for your next high quality dividend growth stock investment…

Our top 7 favorite blue chip stocks are analyzed in detail below.

The 7 Best Blue Chip Buys Today

The 7 best blue chip stocks as ranked by 5-year expected annual returns from The Sure Analysis Research Database (excluding REITs and MLPs) are analyzed in detail below. In this section, stocks were further screened for satisfactory Dividend Risk score of ‘C’ or better.

Blue Chip Stock #7: Lockheed Martin (LMT)

Lockheed Martin is the world’s largest defense company. About 60% of the company’s revenue comes from the U.S. Department of Defense, with other U.S. government agencies (10%) and international clients (30%) making up the remainder.

The company consists of four business segments: Aeronautics (~40% of sales) which produces military aircraft like the F-35, F-22, F-16and C-130; Rotary and Mission Systems (~26% sales) which houses combat ships, naval electronics and helicopters; Missiles and Fire Control (~16% sales) which creates missile defense systems; and Space Systems (~17% sales) which produces satellites.

Lockheed Martin reported another year of growth in 2020. For the fourth quarter, company-wide net sales increased 7% to $17 billion, while earnings-per-share increased 21%. All four business segments again increased net sales. For the year, company-wide net sales increased 9% to a record $65.4 billion while diluted GAAP earnings per share increased 12% to a record $24.50 per share.

Source: Investor Presentation

Lockheed Martin’s backlog is approximately $147.13 billion, driven by increases in Aeronautics, Missiles and Fire Control, and Rotary and Mission Systems, offset by a decline in Space. The company’s outlook for 2021 provides from revenue of at least $67.1 billion and diluted earnings per share of at least $26.00 per share.

Lockheed Martin is an entrenched military prime contractor. It produces aircraft and other platforms that serve as the backbone for the U.S. military and other militaries around the world. This leads to a competitive advantage as any new technologies would have to significantly outperform extant platforms. These platforms have decades-long life cycles and Lockheed Martin has expertise and experience to perform sustainment and modernization.

The combination of P/E expansion, 8% expected EPS growth and the 2.7% dividend yield to generate 12.0% annualized total returns over the next five years.

Blue Chip Stock #6: OGE Energy (OGE)

OGE Energy is the parent company of Oklahoma Gas and Electric Company (OG&E), a regulated electric utility that serves more than 860,000 customers in Oklahoma and western Arkansas. OGE Energy also owns 25.5% of Enable Midstream Partners (ENBL), a Master Limited Partnership (MLP) that owns and operates pipeline networks and storage tanks of natural gas and crude oil.

Source: Investor Presentation

On February 16th, 2021 Enable Midstream Partners agreed to be acquired by Energy Transfer (ET) in an allstock deal, which is expected to close this year. When the deal materializes, OGE Energy will own approximately 3.0% of Energy Transfer.

In late February, OGE Energy reported (2/25/21) financial results for the fourth quarter of fiscal 2020. In the year, adjusted earningspershare decreased 4%, from $2.16 to $2.08, primarily due to higher depreciation amounts, which resulted from recent growth projects, as well as mild summer weather. Management provided positive guidance for 2021, expecting earningspershare of $1.76$1.86 from the utility business plus $0.30$0.37 from the midstream investments for a total of $2.06$2.23.

Shareholder returns will be fueled by 2% per year from a rising P/E multiple. Combined with 5% expected EPS growth and the 5.0% dividend yield, total returns are expected to reach 12% per year over the next five years.

Blue Chip Stock #5: Royal Gold, Inc. (RGLD)

Royal Gold Inc. is a precious metals royalty and streaming company that owns interest in some of the world’s most desirable mines. The corporation’s main focus is acquiring and managing precious metal stream and royalty interests. This business model provides exposure to higher metal prices and future product expansion while limiting downside by having limited exposure to operating and capital cost risks.

Source: Investor Presentation

On February 3rd, RGLD released second quarter results and achieved record revenue of $158 million, a 28% yearoveryear increase. This large increase was primarily due to increased gold, silver and copper prices and an increase in production within the royalty segment of the business. Operating cash flow of $100 million was also a 28% increase over the prior year quarter.

For the first six months of fiscal 2021, adjusted net income per share grew 35% from $1.27 to $1.72. The Khoemacau project development has reached 85% construction, and the silver stream is now 80% funded. Royal Gold has made an advance payment of $212 million for 80% of the silver produced from Khoemacau until certain delivery thresholds are met.

The runup in precious metals prices naturally supports organic growth within the streams and royalty portfolio. The completion of the Khoemacau Project will lead to increased revenue starting with its first concentrate shipment in Q3, and sustained fully rampedup production should begin in Q1 2022.

Shares have a relatively low dividend yield of 1.1%, but the combination of dividends, expected EPS growth of 5.5% per year plus a meaningful boost from an expanding P/E multiple will fuel expected returns of 12.1% per year.

Blue Chip Stock #4: Enbridge Inc. (ENB)

Enbridge is an oil & gas company that operates the following segments: Liquids Pipelines, Gas Distributions, Energy Services, Gas Transmission & Midstream, and Green Power & Transmission. Enbridge is a large-cap stock with a market capitalization of ~$75 billion.

Note: As a Canadian stock, a 15% dividend tax will be imposed on US investors investing in the company outside of a retirement account. See our guide on Canadian taxes for US investors here.

Enbridge reported its fourth-quarter earnings results on February 11th. The company generated revenues of CAD $10 billion (US$7.9 billion) during the quarter, down 19% in the previous year’s quarter. Revenues were down despite the fact that new projects were placed into service.

Fourth-quarter adjusted EBITDA increased 1% year over year, as the company’s revenue declines were offset by lower costs. Distributable cash flows totaled US$1.7 billion, or US$0.86 on a per-share basis, which easily covered Enbridge’s dividend payments.

A breakdown of Enbridge’s performance in 2020 can be seen in the image below:

Source: Investor Presentation

Enbridge is forecasting distributable cash flows in a range of CAD$4.70-5.00 for 2021. Using current exchange rates, this equates to USD$3.82 at the midpoint, which would be up 4% versus 2020’s record level.

We expect 4.5% annual cash flow per share growth for Enbridge over the next five years, due primarily to new projects. Enbridge is one of the largest pipeline operators in North America. Its vast asset footprint serves as a tremendous competitive advantage, as it would take many billions of dollars of investments from new market entrants if they wanted to be able to compete with Enbridge.

On December 8th, the company also raised its dividend by ~3%. Shares currently yield 7%. The combination of dividends, DCF-per-share growth, and an expanding valuation multiple could lead to total annual returns of 12.8% per year over the next five years.

Blue Chip Stock #3: Merck & Co. (MRK)

Merck & Company is one of the largest healthcare companies in the world. Merck manufactures prescription medicines, vaccines, biologic therapies, and animal health products. On 2/5/2020, Merck announced that it was spinning off its women’s health, legacy brands and biosimilar products into a separate company. These businesses represent ~$6.5 billion of revenues. The transaction should be completed in the first half of 2021.

Merck released fourth-quarter and full-year results on 2/4/2021. Quarterly revenue increased 5.4% to $12.5 billion, but was $140 million lower than expected. Reported net income was a loss of $2.094 billion, or -$0.83 per share, compared to net income of $2.357 billion, or $0.92 per share, in the previous year. Net income and earnings-per-share included significant charges related to acquisitions and intangible asset impairments.

For the year, revenue grew 2% to $48 billion. Reported net income of $2.78 per share, compared unfavorably to $3.81 per share, in the prior year. Again, reported net income and earnings-per-share included significant charges related to acquisitions and intangible asset impairments. Adjusted EPS of $5.94 per share for 2020 was up 14.5% from $5.19 per share in 2019.

Oncology continues to be a growth driver for Merck.

Source: Investor Presentation

Keytruda, which treats cancers such as melanoma that cannot be removed by surgery, and non-small cell lung cancer, remains an excellent source of growth as revenues were higher by 28% for the quarter and 30% for the year. The product eclipsed the $14 billion mark for revenue in 2020. Merck’s HPV vaccine Gardasil returned to growth in the fourth quarter, as sales improved 44% due to replenishment of doses that were borrowed in the fourth quarter of 2019 from the CDC Pediatric Vaccine Stockpile.

Merck expects adjusted EPS of in a range of $6.48 to $6.68 and revenue of $51.8 billion to $53.8 billion for 2021. We expect 5% annual EPS growth over the next five years. In addition to valuation changes and the 3.4% dividend yield, we expect total returns of 13.1% per year for Merck stock.

Blue Chip Stock #2: Bristol-Myers Squibb (BMY)

Bristol-Myers Squibb is a leading drug maker of cardiovascular and anti-cancer therapeutics, with annual revenues of about $42 billion.

The past year has seen the company transform itself, due to the $74 billion acquisition of Celgene, a peer pharmaceutical giant which derived almost two-thirds of its revenue from Revlimid, which treats multiple myeloma and other cancers.

The end result is that Bristol-Myers Squibb is now an industry goliath, which continues to generate strong results even during the coronavirus pandemic.

Source: Investor Presentation

The past year has seen the company transform itself, due to the $74 billion acquisition of Celgene, a peer pharmaceutical giant which derived almost two-thirds of its revenue from Revlimid, which treats multiple myeloma and other cancers.

Bristol-Myers announced fourth quarter and full-year results on 2/4/2021. For the quarter, revenue grew 39% to $11.1 billion, topping estimates by $329 million. The company reported a net earnings loss of $10 billion, or $4.45 per share, compared to a net loss of $1.1 billion, or $0.55 per share, in the prior year. Reported net earnings included significant charges related to recent acquisitions.

Meanwhile, adjusted earnings-per-share of $1.46 per share for the fourth quarter, grew 20% year-over-year. For the year, revenues grew 63% to $42.5 billion while adjusted EPS improved 37% to $6.44.

BMY has positive growth potential moving forward. Not only is the Celgene acquisition an immediate catalyst, the company’s strong pharmaceutical pipeline will fuel its future growth. For example, Revlimid sales increased 18% for the fourth quarter, while Eliquis, which prevents blood clots, reported sales growth of 12% due to high demand in the U.S. and internationally, offset by lower prices.

Another growth product is Orencia, which treats rheumatoid arthritis, which grew revenue by 9%. We expect 3% annual earnings growth over the next five years for BMY.

Bristol-Myers raised its guidance for adjusted EPS to a range of $7.35 to $7.55 from $7.15 to $7.45 previously. The company’s recently announced $2 billion addition to its share repurchase is a positive catalyst for earnings-per-share growth.

Based on expected EPS of $7.45, shares of BMY trade for a forward P/E ratio of 8.4. Our fair value P/E estimate is a P/E of 13-14, which is more in-line with the pharmaceutical peer group. Lastly, BMY has a 3.1% dividend yield, leading to total expected returns of 15.5% per year over the next five years.

Blue Chip Stock #1: Perrigo Company plc (PRGO)

Perrigo’s history goes all the way back to 1887 when Luther Perrigo, the proprietor of a general store and appledrying business, had the idea to package and distribute patented medicines and household items for country stores. Today, Perrigo operates in the healthcare sector as a manufacturer of overthecounter consumer and pharmaceutical products.

On 3/1/2021, the company announced that it would sell its Generic Rx Pharmaceuticals business to Altaris Capital partners for $1.55 billion. Perrigo also reported earnings results for the fourth quarter and full year on 3/1/2021. For the quarter, revenue declined 2.5% to $1.29 billion, while adjusted earningspershare fell 12.3% to $0.96. For 2020, revenue increased 5% to $5.1 billion.

Source: Investor Presentation

Adjusted earningspershare of $4.02 essentially matched the prior year’s result. Perrigo expects to grow adjusted earningspershare by 7% for 2021.

The company has scaled back its pharmaceutical operations. Consumer health products now represent approximately 80% of total revenue. And, the company will spinoff its pharmaceutical segment to further focus on consumer products. Focusing on consumer products will add stability to Perrigo, but these products typically grow at a lower rate than pharmaceuticals. Overall, we expect 5% annual earnings growth through 2026.

Perrigo stock trades for a 2021 P/E ratio below 10, compared with our fair value estimate of 10. Shareholder returns will be boosted by a rising valuation multiple, expected EPS growth of 5%, and the current dividend yield of 2.4%. Overall, total returns are expected to reach 16.9% per year over the next five years.

Final Thoughts

Stocks with long histories of increasing dividends are often the best stocks to buy for long-term dividend growth and high total returns. But just because a company has maintained a long track record of dividend increases, does not necessarily mean it will continue to do so in the future. Investors need to individually assess a company’s fundamentals, particularly in times of economic distress.

The coronavirus pandemic of 2020 had a significant impact on the global economy, but high-quality blue chips such as the 7 in this article continued to generate profits, and pay dividends to shareholders. They also have compelling valuations that make them attractive picks for investors interested in total returns.

 

Click here to download your Excel spreadsheet of all 260+ blue chip stocks, including metrics that matter like dividend yield and the price-to-earnings ratio.

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