2016 Blue Chip Stocks List: 3%+ Yields & 100+ Year Histories
Published June 30th, 2016
High quality businesses with shareholder friendly managements trading at fair or better prices make for excellent long-term investments.
But finding these investments is not always easy – especially in today’s overvalued market.
This guide makes locating high yielding blue chip stocks convenient. It includes a free excel spreadsheet download of all 34 S&P 500 businesses with 100+ year operating histories and dividend yields greater than 3%.
The long-term performance and current events of these long-term businesses are analyzed in detail.
Some of their performances are pedestrian, while others are exceptional.
What Are Blue Chip Stocks?
Blue chip stocks are established large-cap businesses that pay reliable dividends. They have long corporate histories and provide well-known products and/or services.
This article examines every business in the S&P 500 with a 3% yield and a 100+ year corporate history. Both of these metrics are important in finding examples of blue chip companies.
Blue chip stocks should pay reliable, above average dividends.
- Stocks with 100+ year histories are generally reliable
- Stocks with 3%+ dividend yields by definition pay above average dividends
Finding Top Blue Chip Stocks
Finding the best blue chip stocks does not need to be complicated. Here’s how to find the best of the best:
- Only look at stocks with yields at or above 3%
- Examine how long the company has been in business
- Determine fair value (prefer low P/E ratios)
- Look for a strong competitive advantage
- Invest in high quality blue chips trading at fair or better prices
This article makes identifying high quality blue chip stocks even easier. Click here to download your blue chip excel spreadsheet list of all 34 S&P 500 stocks with 3%+ dividend yields and 100+ year operating histories.
The spreadsheet can be sorted using dividend yield, date the company was founded, forward price-to-earnings ratio, and much more.
Keep reading this article for detailed analysis on all of these businesses.
Table of Contents
You can quickly skip to analysis of any of the blue chip stocks analyzed in this article using the table of contents below. Companies are listed in alphabetical order.
- Altria (MO)
- American Electric Power (AEP)
- BB&T Corporation (BBT)
- Boeing (BA)
- CenterPoint Energy (CNP)
- Chevron (CVX)
- Coca-Cola (KO)
- Consolidated Edison (ED)
- Emerson Electric (EMR)
- Entergy Corporation (ETR)
- ExxonMobil (XOM)
- Ford (F)
- General Motors (GM)
- Harley Davidson (HOG)
- IBM (IBM)
- International Paper (IP)
- Merck (MRK)
- National Oilwell Varco (NOV)
- Nordstrom (JWN)
- ONEOK (OKE)
- Pfizer (PFE)
- Philip Morris (PM)
- Principal Financial Group (PFG)
- Procter & Gamble (PG)
- Prudential Financial (PRU)
- Public Service Enterprise Group (PEG)
- Target (TGT)
- The Dow Chemical Company (DOW)
- Wells Fargo (WFC)
- Western Union (WU)
- Weyerhaeuser (WY)
- Williams Companies (WMB)
- Xcel Energy (XEL)
- Xerox (XRX)
Date Founded: 1847
CAGR Since January of 1970: 20.3%
Altria’s performance since 1970 is nothing short of amazing. The company has realized a CAGR of 20.2% in this time period… Every $1 invested in Altria is now worth $5,506 dollars (yes, you read that correctly). That is the power of compound interest at a high growth rate. For comparison, the S&P 500 generated a CAGR of 10.3% over the same time period.
Altria (formerly Philip Morris prior to 2008) is the single best performing stock over the last 50+ years according to Jeremy Siegel’s book The Future for Investors.
The company’s excellent performance is due in large part to the strength of the Marlboro brand.
Source: Altria 2016 Annual Shareholders Meeting (US market share)
I want to be clear: There is no way Altria can continue compounding investor wealth at 20% a year going forward (for any long period of time). The company simply cannot grow its earnings at that type of pace going forward.
But that doesn’t mean investors should expect poor returns…
Altria uses high dividends, efficiency gains, and share repurchases to reward shareholders with attractive total returns. In short, Altria’s management is (and has been for a very long time) excellent at capital allocation.
Altria also has a potential cash windfall. Altria owns 27% of beer giant SAB Miller. InBev plans to acquire SAB Miller for $108 billion. This means cash proceeds of around $29 billion (over 20% of Altria’s market cap) could come to Altria. The company is very shareholder friendly and allocates capital well, so these funds will likely be put to good use.
On the downside, other investors have taken notice of Altria’s continued strong performance. The company is currently trading for a forward price-to-earnings ratio of 19.7, which is a bit high considering the company’s presence in a lower growth industry.
Altria makes an excellent long-term holding, but now is not the ideal time to start a new position in the stock.
Date Founded: 1906
CAGR Since January 1970: 9.1%
American Electric Power is a regulated utility in the United States. It is very stable and has a long track record of consistent returns through modest earnings growth and a high dividend.
Last year, American Electric generated $16.5 billion of revenue and grew operating earnings by 7.5%. It expects to grow operating earnings by 4%-6% each year over the long term.
The company got off to a slow start this year…
Operating earnings per share declined 20% in the first quarter due to the warm winter and mild temperatures across American Electric Power’s service markets. Still, American Electric expects to generate $3.60-$3.70 per share in operating earnings per share in 2016.
It expects continued success in its transmission business and its focus on the regulated business. In the first quarter, the transmission and distribution business grew profit by 11% year over year, due largely to favorable rate changes.
Operating as a regulated utility provides stability for American Electric, as the company routinely receives rate hike approvals each year, which help the company steadily grow earnings from year to year.
Its solid profitability should allow it to continue raising dividends, as it has done regularly for many years. American Electric increased its dividend by 5% last year, and it has paid a dividend for more than 420 consecutive quarters, dating all the way back to 1910. It maintains a target payout ratio of 60%-70% of its operating earnings each year.
Based on its earnings per share last year and current year forecast, American Electric’s current $2.24 per share dividend represents 61% of its projected 2016 earnings per share. The stock currently yields 3.5%.
Date Founded: 1872
CAGR Since March 1990: 10.0%
BB&T is a large regional bank with a $25+ billion market cap. The company’s locations are spread across Texas and the eastern portion of the United States.
Source: BB&T 2016 Barclay’s Presentation
As a bank, BB&T needs higher interest rates to sufficiently increase profitability.
However, the company has a strategy to grow, even in a low-rate climate. The strategy involves acquisitions.
In 2014, BB&T