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Ten Top Blue-Chip Values

03/05/2014 9:00 am EST

Focus: ETFs

Kelley Wright

Managing Editor, Investment Quality Trends

Our primary purpose is to assist investors in growing their capital and income base from which to generate cash for their current and future needs, says blue-chip dividend-focused advisor Kelley Wright in Investment Quality Trends.

We believe that shares of high-quality stocks, purchased at a historically repetitive area of low-price/high-yield, offer the greater potential for downside protection and upside appreciation.

Our Timely Ten list is not just another “best of, right now” list. Rather, it is our reasoned expectation, based on our methodology and experience, that these ten currently undervalued stocks offer the greatest real total-return potential over the next five years.

Do we believe that all ten will appreciate simultaneously or immediately? Of course not. Our four-plus decades of research and experience, however, leads us to believe that these stocks, purchased at current undervalued levels, are well-positioned for both, growth of capital, and income.

Whether you are building a portfolio from scratch, are partially invested and seeking new positions, or are fully invested and in need of some affirmation and hand holding, The Timely Ten represents our current top ten recommendations. Here are our latest Timely Ten selections:

CVS Caremark (CVS)—yielding 1.6%.

Chevron (CVX)—yielding 3.6%.

Philip Morris International (PM)—yielding 4.8%.

Coca-Cola (KO)—yielding 2.9%.

Baxter International (BAX)—yielding 2.8%

Abbott Labs (ABT)—yielding 2.3%.

ExxonMobil (XOM)—yielding 2.8%.

McDonald's (MCD)—yielding 3.4%.

Occidental Petroleum (OXY)—yielding 2.8%.

Reliance Steel & Aluminum (RS)—yielding 1.8%.

The Timely Ten is comprised of stocks from the Undervalued category, based on dividend parameters. They generally have an S&P Dividend & Earnings Quality ranking of A- or better, and show exemplary long-term dividend growth.

These stocks also typically show a P/E ratio of 15 or less, a payout ratio of 50% or less, long-term debt-to-equity of 50% or less, and technical characteristics that suggest the potential for imminent capital appreciation.

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