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Blue chips – tools with benefits

In the big diversified world of mutual funds, every portfolio is dissected to the point that each line from the document and every company are put under a different spotlight. All of this is definitely for the better since I want only to promote something which is absolutely transparent and there is a real profit to be made from all this knowledge. This is the reason why I wrote my first article about MFs, which you can read here: < ;

About Blue chips – named by those which are used in the poker games and are considered the most valuable token from them all. Part of the same mutual system of trading with stocks which drives the aforementioned, but are considered much safer because of a few reasons we are going to examine here:

  • They have the so called long history of dividend growth, which could be traced back more than one generation. Due to the fact that you are going to get your dividends equal or in excess of inflation’s rate;
  • Diminished levels of fluctuations on the stock market for long periods;
  • Big, serious companies with little debt and enormous capitalization which send the message of stability to all their shareholders;
  • Very competitively advanced firms in the field of business which are more successful than others because of their high position in the economic sphere. This could be translated as having stakes in assets which are not part of every MF and most likely will never be;
  • Tracks the value of stocks for a longer period and buys whenever the price is low;


For anyone to understand what these mostly American companies represent, all it takes is one look at the list/portfolio. I will include a list below though you can find those enterprises indexed in the DJIA and the S&P 500.

The success rate of the Blue chips is measured around the typical 10% profit ratio which you can expect from a MF. Of course, at some point shareholders can always gain dividends in return of 12-13% for a year but keep in mind that if you are not the wealthiest person in the world you might win only a little sum. The understanding of millions being won just because somebody invested something at Blue chips is only true in the case of a huge investment made in the right moment. In defense of the BC I am going to admit that sooner than later it is indeed the right moment and with the diversified portfolio of 50 plus companies offered to you – you will win back your asset. This is an actual story made public and quite known to all who are interested in the long-term ventures such as these.

One of the curious aspects of those financial tools is the so called stepped-up basis loophole. In case of a family who wishes to preserve some wealth for their children, this is the mechanism which comes in aid under the form of a tax benefit (which concerns the U.S. citizens since it is a law voted from the Congress). This stands for all men who chose to acquire stocks, real estate ventures or other assets, left them to any living heir and this revenue is not to be charged with any taxes as if the shares were both in the same day they are inherited. Well, there are some rules to be taken into account, but as long as your newly acquired assets are below the estate tax limits, you won’t have to pay. At least not right away.

To the other investors, who are not U.S. citizens, I have to state that I do not know of every regulation or law which is issued or voted in their country, but since I do have an experience on the subject I guarantee to you this: In case of an investment in MF plan you always pay a fee, and in some cases an annual fee is charged (the highest I’ve seen was 5%) from the depositary trust/bank. But, even so any earning which you make since that moment is yours for the taking. I made this myself several times already and as a Bulgarian citizen I do not pay taxes for any of the shares I own. You might consider this before you make a decision about investing in something less meaningful like sports bets.

Have you heard about Dividend yield?

This is real terminology under explanation, but this may give you some advantage if you follow my advices. DY is a financial ratio that shows how much a company pays out in dividends every year in relation to its share price. DY is shown as a percentage and it is calculated by dividing the dollar value of the dividend paid from a company for a year and the share price at which stocks are traded at this moment.

E.G.: If a firm pays annual dividend of $1 and the stock trades at $22, the Dividend yield is 4.5% ($1/$22 = 0.045).

So basically this is a simple method for you not only to choose a MF which is better at paying higher dividends every year, but because of this now you can calculate how much money you are going to earn for every invested dollar.

From those DY which I’ve seen in the portfolios in which I am personally invested, the ratio begins at 1.3% and reaches 4% at the top. I do realize that this 3% are a considerable difference, so I am willing to advise you to always pick those which are at least around 2.5%. Ideally you can have mutual funds only with high Dividend yields. That ratio is displayed in the documentation of the portfolio and its number is legitimate for the last 12 months.

Some companies which are traded in Blue chips:

American Express


Berkshire Hathaway



The Clorox Company

The Coca-Cola Company



Exxon Mobil

General Electric

The Hershey Company

Johnson & Johnson

Kraft Heinz

McDonald’s Corporation

Nestle SA


Procter & Gamble

United Technologies


Wal-Mart Stores

The Walt Disney Company

Wells Fargo & Company


Written by: Lyubomir S. Evtimov

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