Blue Chip Bets for Growth and Income

01/08/2016 9:00 am EST

Focus: STRATEGIES

Kelley Wright

Managing Editor, Investment Quality Trends

With so much uncertainty on so many fronts, my thought is that the markets will be relatively flat the first half of the year. As such, the income component of total return will be vitally important, explains blue chip stock expert Kelley Wright, editor of Investment Quality Trends.

With interest rates on high quality credits still very low, this will necessarily make dividends the primary source for income.

For the less experienced investor, his attention will immediately be drawn to the highest yielding securities. As our readers know, however, the highest yielding securities are not always the safest.

More than ever it is imperative that investors look for the highest quality securities with long-term track records for managerial excellence as well as well protected dividends as evidenced by modest payout percentages and manageable levels of debt.

Our primary purpose is to assist investors in growing their capital and income base to generate cash for their current and future needs.

To that end we believe that shares of high quality stocks purchased at an historically repetitive area of low-price/high-yield offers the greater potential for downside protection and upside appreciation.

It is our reasoned expectation based on our methodology and experience, that these ten stocks currently offer the greatest real total-return potential over the next five years.

CVS Health (CVS)—yielding 1.5%
Abbott Labs (ABT)—yielding 2.3%
Schlumberger Ltd. (SLB)—yielding 2.9%
United Technologies (UTX)—yielding 2.8%
TJX Companies (TJX)—yielding 1.2%
UnitedHealth Group (UNH)—yielding 1.7%
Union Pacific (UNP)—yielding 2.9%
Int'l Business Machine (IBM)—yielding 3.8%
Fluor Corp. (FLR)—yielding 1.9%
Eaton Corp. (ETN)—yielding 4.4%

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.

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