Blue Chip Stocks that Pay Dividends

Investors have numerous choices when it comes to purchasing stocks that pay dividends. There are investments that pay an annual dividend, those that pay quarterly, and even some that pay on a monthly schedule. There are real estate and oil income trusts, growth stocks, financial stocks, and blue chip stocks that pay dividends.

With so many options, investors may find it hard to choose which dividend paying stocks to invest their money in. Worse yet, an investor may find the highest yielding stocks attractive and begin purchasing unreliable, risky securities with a monthly dividend. It is important to remember that not all dividend stocks are created equal, which is why finding blue chip stocks that pay dividends is so important.

• Few Liabilities - A blue chip stock that pays dividends tends to have very few liabilities. The fewer liabilities the company has, the more cash they have which leads to sustained dividend payments. Having few liabilities shows how strong a company is positioned and will tell how well they can handle an economic downturn or recession.
• Stable Earnings - Despite having few liabilities, a company still needs earnings to operate and payout a dividend to shareholders. A blue chip stock will have a history of stable earnings that increase overtime. The ability for a company to withstand a poor economy and keep earnings on track is a very positive sign.
• Well Established - Blue chip stocks that pay dividends have been around for many years. There are no start up companies found in a list of blue chip stocks. Instead, they are made up of companies that have been around for years and have stood the test of growth and lean times.
• Pay Regular Dividends - A blue chip company will have a history of of paying regular dividends. Since these companies are already well established, there should be plenty of data to help investors analyze their dividend history. Look for companies that not only maintain a regular dividend, but also continue to raise their payout every year.
• Strong Future - Blue chip stocks that pay dividends will also have a solid future in front of them. While most companies in this stage of their business cycle will not see huge market share gains, the company should still have moderate growth. Both the past performance and future forecasts are important indicators to help identify blue chip stocks.

Investors should be aware that the blue chip companies of the past may not be those of the future. The recent recession, for example, has weeded out some of the weaker blue chip companies. Once powerful companies like General Motors (GM), Bank of America (BAC), and General Electric (GE) all lost their "blue chip" status as their weaknesses were all exposed in the most recent economic turmoil.

Purchasing blue chip stocks that pay dividends is an excellent opportunity to invest money. This investment has the potential to create a long term income stream that can help offset monthly expenses and help into retirement. Investors who can properly identify these solid companies by looking for certain characteristics can position themselves for huge returns in the long run. While some blue chip companies eventually lose their status, there are very few risks with this type of investment strategy.