National Australia Bank Ltd. (ASX: NAB) shares, Transurban Group (ASX: TCL) shares and BHP Billiton Limited (ASX: BHP) shares offer generous dividends to shareholders.
Why buy blue chip shares?
Some people mistake 'Blue Chip' with cookies or 'blue ribbon' ice cream. But there are some features that distinguish blue chip investments from other investments which are worth noting.
A blue chip investment typically has a strong brand, well-established operations and is a leader in its industry. As a result, they are often big businesses.
These features combine to offer investors a company that is considered 'lower risk' by the market. By 'risk', we often mean the random ups and downs of share prices. However, it's important to remind ourselves that volatility (the ups and downs) is like your admission ticket to the sharemarket. Just accept it.
3 ASX blue chip shares
Here are some ASX blue chip share ideas to add to your watchlist in 2017…
NAB
NAB is Australia's fourth-largest lender and a leading retail bank. It controls more than 21% of the Australia's business banking and around 14.6% of household lending. The bank's share price shot higher in recent times as the market warmed to the divestments of its UK and USA subsidiaries. At today's prices, NAB shares are forecast to pay a dividend of 5.8% fully franked.
Transurban Group
Transurban Group is Australia's largest toll road owner and operator with some of our country's vital roads and tunnels under its control. The $24 billion company owns Melbourne's CityLink; Sydney's Hills M2, Eastern Distributor, the Cross City and Lane Cove Tunnels (among others); and Brisbane's AirportlinkM7, Logan Motorway and more. It also has roads in the USA. Transurban is tipped to pay an unfranked dividend of 4.3%.
BHP Billiton
The 'Big Australian' is one of the world's leading mining companies, specialising in commodities such as oil, iron ore, copper and coal. The BHP share price had staged somewhat of an incredible comeback since the beginning of 2016 when commodity prices were plumbing new lows on fears of global oversupply. Even the company was worried, having slashed its 'progressive' dividend policy in favour of shoring up its balance sheet. Fast-forward 15 months and BHP shares are 56% higher, and commodity prices are at elevated levels. What's more, the company is tipped to pay a 3.5% dividend.
Foolish Takeaway
Blue chip shares are often the 'bedrock' of income-focused and conservative investors' portfolios because of their defensive qualities. However, it's important to note that they can still be very volatile (e.g. BHP's 56% rally) and subject to the whims of the market. Therefore, it's important to maintain a diversified portfolio and hold good quality shares for the long-term.
In my opinion, each of these three companies is a hold at today's prices. Luckily, if you want to buy shares today, there are over 2,000 to choose from on the ASX!
