Why invest in Blue Chip Shares?
Australia's share investors go to leading ASX large cap stocks. They pay out their profits in twice yearly dividends to investors at an average of 5-6%.
Make your money work for you
Investing in shares makes your money work harder for you, giving you better income and the opportunity for capital growth. Think of what your future self needs. What are the costs of letting my money sit in the bank?
Watch your money grow with an increasing share price.
Generate extra income now. Blue Chips have a long record of paying stable or rising dividends. Many retirees aim to own enough shares to live off the dividend income.
Blue Chip stocks are the giant house-hold names and market leaders in their sector. They are seen as a lower risk investment.
Do I leave my money in a bank deposit or invest in Shares?
This dividend yield or around 5% compares very favourably to term deposit rates which are currently less than 1% in Australia. There are also tax advantages in the form of franking credits.
Blue Chips are the leading companies listed on the ASX. They are the biggest companies by market capitalisation on the stock market. These are the giant financials, industrials and resources companies and the top household names. BHP, CBA, CSL, NAB, Westpac, ANZ, Macqarie Group, Fortescue, Wesfarmes and Telstra. They are in the S&P/ASX200 index.
The ASX historically goes up 9 out of every 10 years.
How to choose Blue Chip Stocks?
To make money from shares you need to buy when it’s price and market cap are low before a big price spike so you don’t pay too much for it.
Seek financial advice when you need to and think about what you want to achieve with your long term and short term financial investments.
Skip the hard work of fundamental analysis and follow our expert advice to get the top Blue Chip companies trading on the ASX that can offer more secure investments with lower risks. Invest with confidence without needing to understand financial statements or read annual reports.
The DIY investor's checklist
Start by researching the top Australian Blue Chip stocks on the ASX that can offer more secure investments with lower risks. Blue Chips offer stable dividends and a minimal level of risk, but all companies have stock specific risks.
Choose companies carefully. We look for strong fundamentals and performance – balance sheet, cash flow, profit growth.
Strong operating profitability
Focus on cash flow return on assets because it’s similar to Return on Assets but is more focused on cash flow. Once again strip out the non-cash accounting related effects to get back to what a company is really getting as a return from its past investments.
Price to Book Ratio
Check the company is not expensive. You are looking at the share price divided by the net assets per share. This methodology comes up with the same result as the simple PE or price earnings ratio, but is preferred because it is more easily comparable across industries. This involves some work because you are stripping out a lot of accounting related non-cash profits and expenses.
The dividend yield
Check the previous years’ payments so you know what dividends are likely to be paid in the future. You can find this information on the ASX or on your preferred trading platform.
Avoiding Capex Humps
Avoid Blue Chip companies that are heavily reinvesting excess cash flow or free cash flow back into the business. We don’t like big “capex humps” coming up where a company is set to spend huge amounts on assets. Consider all your investment options.
Share market fluctuation
Keep calm! Share markets tend to fluctuate and remember to look at the price chart on the ASX website or our website before you start trading so you know the $ range each stock trades within a day/week/month/year/5 years.
Let us do the hard analysis work for you
Our expert analysts do the hard work for you. We produce independent price targets and overlay this with fundamental analysis on the key stocks to own.
Record low interest rates: What do they mean for you?
Banks are a safe deposit for you money. But with record low interest rates, your money is losing value and is not keeping up with inflation. You need to make your money work for you.
What Big Blue Chip stocks do we like? We buy stocks that are value oriented.
This means that they are often not the flavour of the month.
This maximises the return in the short term (dividends) and reduces market risk (of widespread selling).
Dividend income on average is giving you 4.5% a year.
These Blue Chip stocks give you more security in times when the overall market is under pressure. There are some value stocks that pay high dividends and some that don’t, but if your portfolio is skewed towards companies with strong balance sheets, solid cash flow and are paying consistent dividends, you should ride out the share market volatility with positive returns.
Experienced Investors: Start Now
If you are an experienced investor and just want to access our Blue Chip Stock research and advice, we recommend you get into our dashboard now for 14 days free.
Are Blue Chip Stocks safe?
Blue Chip stocks are heavily influenced by trends within the global economy. But each stock is very different and what you pay for each stock is will determine what you get in return.
Check the balance sheet
We look in depth at balance sheets because we know that growth needs to be underpinned by solid foundations. Income is important, but the balance sheet is where value is ultimately derived.
Blue Chips generally provide stable income because they are Australia's established companies that are not looking for high growth but for consistency.
Risk versus return
In Australia term deposit rates are less than 1% meaning your money is losing value over time as it is not currently keeping up with inflation.
Not a 100% guarantee
There is no such thing as a 100% guaranteed investment on the stock market. But our Blue Chip Report guarantees that we know what value looks like and we can show you where to find it. Because of low interest rates, and an overheated property market, more Australians than ever are investing in ASX Blue Chip stocks.
Blue Chip Portfolio
Size is not everything! Sustainable yield is the key. Our Blue Chip Portfolio’s yield is close to 5%, well above the average for the benchmark S&P/ASX 200 Index.
With our leading Blue Chip Report our focus is all about successful ASX Stock investing.