Timely Ten: Top Blue Chip Values

01/02/2015 7:00 am EST

Focus: STOCKS

Kelley Wright

Managing Editor, Investment Quality Trends

In the long run, the underlying value of a company's dividends will also determine price, explains Kelley Wright, editor of Investment Quality Trends.

Our primary goal is to assist investors in growing their capital and income base from which 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.

Individual stock prices fluctuate between repetitive extremes of high dividend yield and low dividend yield. These recurring extremes of yield establish Undervalue and Overvalue price levels.

When a dividend is raised, the Undervalue and Overvalue price levels are raised automatically so they will continue to reflect the historically established yield extremes. Each stock has its own distinctive high and low yield characteristics and must be evaluated individually.

Our Timely Ten list, which is updated monthly, 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. Here are the current Timely Ten:

  • Baxter International (BAX)—yielding 2.9%
  • ConocoPhillips (COP)—yielding 4.1%
  • Coca-Cola (KO)—yielding 2.8%
  • Suncor Energy (SU)—yielding 2.9%
  • Chevron Corp. (CVX)—yielding 3.7%
  • AT&T (T)—yielding 5.2%
  • Philip Morris International (PM)—yielding 4.6%
  • Occidental Petroleum (OXY)—yielding 3.3%
  • Reliance Steel (RS)—yielding 2.1%
  • International Business Machines (IBM)—yielding 2.7%

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 top ten recommendations.

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