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Top 5 Blue Chip Stocks Worth Considering

In a continuation to part 1 of our free report (Ten Blue Chip Stocks Worth Considering) this week's Blue Harbinger weekly reviews the remaining (top 5) blue chip stocks on our list. And yes we do own all five of the top five stocks.

5. Union Pacific (2.8% dividend yield)
Union Pacific (UNP) stock price has gotten crushed over the last year as its energy-related transportation business has fallen off a cliff, and China growth has slowed. However, UNP’s rail business isn’t going away, and it’s only a matter of time before its strategic west coast port access begins to yield tremendous value again. We own UNP in our Disciplined Growth portfolio, and look forward to many years of gains ahead. You can read our members-only UNP reports here.

4. Procter & Gamble (3.2% dividend yield)
Procter & Gamble (PG) is a low-beta, steady-profits, blue chip company, and it is currently on sale. It declined sharply in 2015, and it has only just begun its rebound. The declines were driven by two things. First, unfavorable foreign currency movements (i.e. the strong US dollar made it more expensive for P&G to operate around the world) hurt profits. And second, the company just recently completed a multi-year turnaround strategy where is shed many of its less profitable brands. The dividend yield (3.2%) is still above average for P&G, and we believe the stock has a lot more upside. We continue to own P&G in our Income Equity strategy, and you can read our most recent members-only reports here.

3. Walt Disney (1.5% dividend yield)
Disney (DIS) is a stock that got a little ahead of itself following, and leading up to, blockbuster hits like Frozen and the latest Star Wars film. The stock has pulled back sharply this year thus creating an attractive entry point for long-term investors. Even though Disney faces some challenges with customers “cutting the cord” on ESPN, it remains a juggernaut of timeless and loved brand names. We own this stock in our Disciplined Growth portfolio, and you can read our most-recent members-only reports here.

2. American Express (2.0% dividend yield)
American Express (AXP) is a great brand name that is currently trading at a huge discount as it has declined more than 25% is the last year while the S&P 500 has been close to flat. The company hit a string of bad news starting with the loss of an exclusivity deal with Costco, to an unfavorable justice department ruling on card usage fees, and most recently a very poor earnings announcement. Additionally, unlike Visa and MasterCard, American Express is actually a bank (instead of just a payment processor) so it faces challenges related to low interest rates. On the upside, American Express has switched from aggressive marketing to more cost-conscious behavior. Also, the recent bad earnings announcement may have been a bit of a “big bath” whereby they got all the bad news out of the way at once so they could move forward positively. Additionally, American Express has significant opportunities if it chooses accelerate growth in its GNMS segment which uses a payment processesing model similar to Visa and MasterCard. Overall, we believe this is a stock that has been overly sold off, and offers significant upside potential. We own his stock in our Disciplined Growth portfolio, and you can read our members-only American Express reports here.

1. US Bancorp (dividend yield 2.6%)
US Bank (USB) is rated number one on our list of blue chips stocks worth considering because it offers an attractive dividend yield, and it offers significant safe upside price appreciation potential. Similar to Wells Fargo (#9 on this list), USB has sold off due to many of the same negative news stories and events. However, we like this stock more than Wells Fargo because it is smaller and has more room to grow.  Additionally, USB’s balance sheet is even more transparent and easier to understand than Wells Fargo’s, and for this reason we have a higher degree of comfort that it won’t run into unforeseen problems. Additionally, financial sector stocks have been among the worst in recent years, but we believe this may be about to change as interest rates are starting to inch up, and the banks have made marked improvements to their balance sheets since the financial crisis. Plus, the administration of the next US executive branch leader (as long as it’s not Bernie Sanders) will likely be less hostile towards banks in general. We own USB is both our Income Equity and Disciplined Growth strategies. You can read more here.

And as a reminder, in investing: Be fearful when others are greedy, and be greedy when others are fearful.

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