2016 Blue Chip Stocks List

8/30/2016 2016 Blue Chip Stocks List: 3%+ Yields & 100+ Year Histories - Sure Dividend Sure
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2016 Blue Chip

Stocks List: 3%+
Yields & 100+ Year
Histories
UpdatedJuly12th,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 todays overvalued market.
This guide makes locating high yielding blue

chip stocks convenient. It includes a free excel
spreadsheet download of all 32 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.
http://www.suredividend.com/blue-chip-stocks/#ibm 1/55
8/30/2016 2016 Blue Chip Stocks List: 3%+ Yields & 100+ Year Histories - Sure Dividend Sure Dividend
Some of their performances are pedestrian,

while others are exceptional.

Already know about blue chip stocks? Click

here to download your blue chip stock Excel
Spreadsheet now. Keep reading this article
to learn more.
WhatAreBlueChipStocks?
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
FindingTopBlueChipStocks
Finding the best blue chip stocks does not need
to be complicated. Heres how to find the best of
the best:
1. Only look at stocks with yields at or above 3%

2. Examine how long the company has been in
business
3. Determine fair value (prefer low P/E ratios)
4. Look for a strong competitive advantage
5. Invest in high quality blue chips trading at
fair or better prices
This article makes identifying high quality blue

chip stocks eveneasier. Clickhereto
downloadyourbluechipexcel
spreadsheetlist of all 32 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.
TableofContents
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.
1. Altria (MO)
2. American Electric Power (AEP)
3. BB&T Corporation (BBT)
4. Boeing (BA)
5. CenterPoint Energy (CNP)
6. Chevron (CVX)
7. Coca-Cola (KO)
8. Consolidated Edison (ED)
9. Emerson Electric (EMR)
10. Entergy Corporation (ETR)
11. ExxonMobil (XOM)
12. Ford (F)
13. General Motors (GM)
14. IBM (IBM)
15. International Paper (IP)
16. Merck (MRK)
17. Nordstrom (JWN)
18. ONEOK (OKE)
19. Pfizer (PFE)

20. Philip Morris (PM)
21. Principal Financial Group (PFG)
22. Procter & Gamble (PG)
23. Prudential Financial (PRU)
24. Public Service Enterprise Group (PEG)
25. Target (TGT)
26. The Dow Chemical Company (DOW)
27. Wells Fargo (WFC)
28. Western Union (WU)
29. Weyerhaeuser (WY)
30. Williams Companies (WMB)
31. Xcel Energy (XEL)
32. Xerox (XRX)
Altria
Date Founded: 1847
CAGR Since January of 1970: 20.3%
Altrias 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 Siegels book The
FutureforInvestors.
The companys 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 noway 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 doesnt mean investors should expect

poor returns
Altria uses high dividends, efficiency gains, and

share repurchases to reward shareholders with
attractive total returns. In short, Altrias
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 Altrias 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 Altrias continued strong performance.
The company is currently trading for a forward

price-to-earnings ratio of 21.0, which is a bit
high considering the companys 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.
AmericanElectricPower
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
Powers 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 Electrics
current $2.24 per share dividend represents 61%
of its projected 2016 earnings per share. The
stock currently yields 3.2%.
BB&T
Date Founded: 1872
CAGR Since March 1990: 10.0%
BB&T is a large regional bank with a $25+

billion market cap. The companys locations are
spread across Texas and the eastern portion of
the United States.
Source: BB&T 2016 Barclays 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 acquired Susquehanna

Bancshares for $2.5 billion, shortly after
purchasing Bank of Kentucky Financial for $363
million.
Acquisitions helped boost BB&Ts revenue by 4%

last year, to $9.8 billion, led by record fee
income of $4 billion. The over-arching strategy
is to invest more in feedrivenbusinesses like
wealth management, which can offset weakness
in traditional banking activities which are

suffering due to low interest rates.
Despite these acquisitions, BB&Ts earnings per

share declined 5.9% last year.
On the plus side, BB&T maintains a strong

portfolio. Its non-performing assets declined
$32 million in the fourth quarter, and the
companys loans 90 days or more past due were
0.23% of all loans held for investment at the end
of the year. This compared to 0.28% in the
previous quarter.
Its consistent profitability has allowed BB&T to

continue raising its dividend year after year.
Total dividends paid in 2015 were 10% higher
than the previous year.
BB&T has achieved 10% annualized returns over

the past 26 years, due in large part to its regular
earnings growth and consistent dividends.
BB&Ts dividend has been a significant driver of

its returns; the company has made
uninterrupted cash dividend payments to
shareholders since 1903. Its current dividend of
3.2% is significantly above the average S&P 500
dividend yield.
Boeing
Date Founded: 1916
Boeing has generated 12.6% returns

compounded annually for more than 40 years,
and its future looks equally bright. The company
is a member of the DOW 30 and an excellent
example of a blue chip stock.
Despite being around for 100 years, Boeing has

still managed to grow quickly over the last
decade.
Source: Boeing 2016 Investor Conference

Presentation from the CEO
Boeing is benefiting from the boom in global

demand for aircraft, and is making major
breakthroughs in new markets. This year,
Boeing announced a deal with Iran that could be
worth as much as $25 billion.
Boeing has repositioned its business away from

defense operations in recent years. Two-thirds of
Boeings total revenue last year came from the
commercial market.
Boeing grew commercial aircraft deliveries by

5% in 2015, which marked a record for the
company. Free cash flow was up 4% to $6.9
billion.
With its impressive cash flow, Boeing returns

significant amounts of cash to shareholders. Last
year, the company increased its dividend by 20%
and also approved a new $14 billion share
repurchase authorization. These buybacks will
be a meaningful tailwind for Boeings future
earnings growth, since the buyback level
represents roughly 18% of the companys current
market capitalization.
And it had a $480 billion backlog to start 2016,

not including the agreement with Iran, which is
another positive catalyst for Boeings earnings
growth going forward. Demand for commercial
aircraft is increasing at a high rateBoeings
revenue from commercial aircraft rose 10% last
year, and this year, management maintains a
positive forecast. The company expects 5-8%
growth in core earnings per share this year.
Boeing could once again generate double-digit
returns for shareholders this year, based on its
earnings growth, 3.3% dividend, as well as
potential multiple expansion.
Boeing stock trades for a price-to-earnings ratio

of 16, which is below the S&P average price-to-
earnings multiple. Boeings valuation multiple
has come down to start this year, but it could
earn at least a market average multiple given its
prospects for above-average earnings growth.
CenterPointEnergy
Date Founded: 1882
CenterPoint Energy is a well diversified energy

company with a $10 billion market cap. It has a
midstream energy business, but also has a utility
business.
The utility segment comprised 65% of

CenterPoints earnings last year, and is projected
to make up 75%-80% of total earnings in 2016.
CenterPoint is mostly a utility. As such, its

future returns may be suppressed if interest
rates rise going forward.
As a utility, returns generally would be in the

high single-digit range, in line with its historical
average since 1970, as a result of modest
earnings growth and its 4.4% dividend yield.

CenterPoint is a one of 274 Dividend Achievers
thanks to its 10 year streak of rising dividends.
But in a rising-rate environment, returns may be

less than what investors are accustomed to,
because higher interest rates raise a utilitys cost
of capital. Utilities use lots of debt within their
capital structures to finance their long-term
assets. Utilities like CenterPoint are likely to see
future financing costs rise under higher rates,
which could cause lower earnings growth.
CenterPoints operating profit was flat last year.

Adjusted earnings per share were $1.10 for the
year, after excluding the impacts of one-time
charges. Management expects $1.16 per share at
the midpoint of its 2016 full-year forecast, which
would imply 5% earnings growth this year. If the
company grows earnings by 5%, along with the
4.3% dividend, the implied future returns could
be more than 9%.
Of course, this assumes that the valuation

multiple remains unchanged. The stock
currently trades for approximately 20 times
forward earnings per share estimates, which is
fairly aggressive for a utility stock.
Utilities are defensive in nature, and typically do

not hold premium valuation multiples when
compared to the S&P 500, particularly if interest
rates are set to rise from here.
Now is not the time to buy CenterPoint.
Chevron
Date Founded: 1879
As one of the worlds largest oil and gas super

majors, Chevron has been hit hard by the huge
decline in commodity prices over the past two
years. Even though WTI crude has rallied to $50
per barrel from $27 per barrel at the 2016 low,
Chevron had a brutal year in 2015. Netprofitfell
76%lastyear.
The good news is that Chevron remained

profitable last year, which was no small feat
given how many energy companies reported
steep losses. Chevron still earned $4.6 billion in
2015, thanks in large part to $7.6 billion in
downstream profit.
Chevron grew earnings in the downstream

business, which includes refining, by 75% last
year. This at least helped offset the $1.9 billion
loss in the upstream business.
The fact that Chevron still generated billions of

profit last year has allowed it to maintain its
dividend through the oil crash. Chevron
currently pays a $4.28 per share annual
dividend, which amounts to a hefty 4.1%
dividend yield.
The company continues to assure shareholders

that dividends willcontinuetorise.
Source: Chevron 1st Quarter 2016 Investor

Presentation
Chevrons recent past has been difficult, but over

the long term, the company has a good chance of
generating returns in line with its historical
average.
The reason is because Chevron has multiple

large upstream projects set to come on line this
year, which will meaningfully help shore up the
companys finances. Two in particular that are
particularly promising are the Gorgon and
Wheatstone liquefied natural gas projects in
Australia.
These are massive projects which cumulatively

cost the company more than $80 billion to build.
These have been significant uses of cash, but
once they begin production, they will turn into
sources of cash. Collectively, the two projects
could produce in excess of 24 million tonnes of
gas each year for decades. Chevron has set the
goal of becoming free cash flow positive by 2017,

and these two projects will help it get there.
CocaCola
Date Founded: 1892
Coca-Cola is one of the most legendary dividend

stocks of all time. Its a favoriteof Warren
Buffett, Chairman of Berkshire Hathaway BRK
B, which owns 400 million shares and is the
companys largest institutional shareholder. The
company is one of Buffetts 20 highest yielding
stocks.
Coca-Cola has generated extremely good returns

for shareholders over a very long period of time.
At a 14.4% annualized return over the past 52
years, a $10,000 investment in Coca-Cola stock
at that time would be worth $10.9 million today.
The reason why Coca-Cola has generated such

massive returns is because it has a highly
profitable business model, backed by one of the
worlds strongest brands and major economies
of scale. Coca-Colas global distribution network
has provided the company with growth in new
markets all around the world.
And yet, Coca-Cola is in a difficult position. Soda

sales in the U.S. have declined steadily for the
past decade. This has weighed on the companys
growth in recent years.
Going forward, Coca-Cola is turning to growth in

new product categories such as teas and juices,
particularly in emerging markets like Asia and
Africa.
Indeed, Coca-Cola is no longer just a soda

company. In all, it has 20 brands that each
generate at least $1 billion in annual retail sales.

Its core brands include soda drinks like Fanta
and its flagship Coke, but also bottled water like
Dasani and BonAqua, as well as Powerade sports
drinks and juices under the Simply and Minute
Maid brands.
Source: Coca-Cola Investor Relations
Coca-Cola currently pays a $1.40 per share

annual dividend which provides a 3.1% dividend
yield, and has increased its dividend for54
consecutiveyears. The company encapsulates
what it means to be a blue chip business.
ConsolidatedEdison
Date Founded: 1823
Consolidated Edison (ED) has compounded

investor wealth at 12.5% a year since 1970 (the
earliest price history for the company in Yahoo!
Finance). For comparison, the S&P 500
generated a CAGR of 10.3% a year over the same
period.
Consolidated Edisons growth is even more

impressive when you consider that the company
is a lowriskutility. To be fair, Consolidated
Edison has benefited greatly from the trend of

falling interest rates over the last 30 years.
Source: Multpl.com
High quality, low risk utilities act as bond

substitutes. You arent going to get rapid growth
from a company like Consolidated Edison. You
are going to get reliable dividend income,
growing a bit faster than inflation.
As a bond substitute, Consolidated Edison stock

tends to rise when interest rates fall, just as the
price of bonds rise as interest rates fall.
Consolidated Edison stock has seen the perfect
storm for total returns over the last 30 years as
interest rates have continuously declined.
Going forward, investors should expect total

returns of around 5.5% to 6.5% a year from
Consolidated Edison stock. Returns will come
from earnings-per-share growth of 2% to 3% a
year, as well as 3.3% from the companys
dividend yield. The company has paid
increasing dividends for 42 consecutive years,
making it one of just 50 Dividend Aristocrats.
The above total returns assume that interest

rates remainaroundtheircurrentlevels. This is
a dubious assumption. The Federal Reserve has
reversed course and is slowly raising rates. It is
possible and perhaps even likely that
interest rates will be significantly higher a
decade from now than they are today.
EmersonElectric
Date Founded: 1890
CAGR Since June 1972: 9.5%
Emerson Electric is caught in a very difficult

operating climate. As a global industrial,
Emerson is highly exposed to the fluctuations in
the global economy. Approximately 52% of
Emersons revenue comes from outside the U.S.
and Canada.
Emerson is also reliant on the energy sector. Due

to the slowdown in economic growth in the
emerging markets and falling commodity prices,
Emerson has seen a decline in sales and earnings
over the past two years. Emersons total sales fell
9% last year, and earnings per share adjusted for
one-time gains fell 15% from 2014.
However, Emerson has an established track

record of creating value for shareholders over
the long term. Over the course of its 125-year
history as a company, Emerson has navigated
through the Great Depression, two world wars,
and the 2008 financial crisis. It has a proven
ability to stay the course and continue to raise its
dividend, thanks to its steady profitability.
Despite the various headwinds impacting

Emerson, the company still generated $2.5
billion in operating cash flow last year. In 2016,
management expects modest recovery in
business conditions. Emerson forecasts over $3

billion in operating cash flow this year.
The companys plans to spur growth over the

next several years are shown below:
Emerson earned $3.17 per share last year, which

was more than enough to cover the $1.88 per
share in dividends distributed in 2015.
Emersons payout ratio is 59% of trailing
earnings, so the company should continue
raising its dividend each year. Emerson has an
excellent dividend streak of 60 years of
consecutive increases. Emerson Electric is one
of just 18 Dividend Kings stocks with 50+
years of consecutive dividend increases.
Emerson pays $1.90 per share in dividends,

which amounts to a 3.5% current dividend yield.
Entergy
Date Founded: 1913
Entergy is a blue chip electric utility stock, with a

$14 billion market capitalization.
It delivers electricity to approximately 2.8

million residential customers, primarily in the
southern United States. The stock has done very
well, and sits near its 52-week high, due to the
rush for yield in a low-rate climate.
However, investors should be aware that in a

rising-rate environment, earnings growth will
likely slow for utilities as higher rates raise a
companys cost of capital.
Entergy is positioning itself to capitalize on

growth in renewable energy going forward.
For example, the company launched utility-scale

solar projects to customers in Arkansas,
Mississippi, and New Orleans.
Moreover, due to continued low wholesale power

prices, Entergy closed two nuclear power plants
that were no longer financially viable.
These efforts allowed the company to raise its

dividend last year forthefirsttimesince2010.
These were important steps for the company to
take, as Entergy has seen its revenue and
earnings stagnate for an extended period. Last
year, Entergys revenue fell 7.9% from 2014.
If the company can reposition itself for growth,

investors should expect Entergys future returns
to be representative of a typical utility, based on
modest earnings growth in the low-single digit
range plus a high dividend yield. Expansion of
the valuation multiple is doubtful, given that
Entergy stock has a price-to-earnings multiple of

15 times forward estimates. This is on par with
the S&P 500 Index.
Entergy currently distributes a $3.40 per share

dividend which provides a 4.2% current
dividend yield.
ExxonMobil
Date Founded: 1870
ExxonMobil is the worlds largest publicly-

traded energy company. It is an integrated
super-major with a large upstream business,
which includes exploration and production, as
well as a large downstream business, which
includes refining and chemicals.
ExxonMobil is one of the most stable stocks in

the energy sector. It has a $368 billion market
capitalization, as well as industry-leading credit
ratings and returns on invested capital each
year. It is a pillar of stability in what can be a
volatile industryas a commodity producer,
ExxonMobil is highly dependent on supportive
oil and gas prices.
As the price of oil has declined by more than

50% in the past two years, this has had a deep
impact on ExxonMobils fundamentals. The
company reported a 50% drop in net profit last
year.
When commodity prices decline, such as the

past two years, it places a great strain on an
energy company. Many energy stocks have cut or
suspended their dividends over the past year to
stay afloat.
However, not only has ExxonMobil maintained

its dividend through the crisis, but ithas
actuallycontinuedtoincreaseitsdividendeach
year.
Earlier this year, ExxonMobil raised its dividend

2.7%. Its new annualized dividend rate of $3 per
share represents a 3.2% dividend yield.
The recent dividend hike makes 34 years in a

row of consecutive dividend increases. This
makes ExxonMobil a Dividend Aristocrat, which
is a group of S&P 500 companies that have
raised dividends for at least the past 25
consecutive years. The companys dividend
history is shown in the image below:
This is a great sign of ExxonMobils staying

power. It continues to remain profitable and
reward shareholders with rising dividends each
year, even when times are tough.
Ford
Date Founded: 1903
Ford Motor Company, like other major auto

makers, is benefiting from a number of
fundamental tailwinds.
Low interest rates and low gas prices over the

past few years have boosted Fords bottom line.
Last year, Ford earned $10.8 billion in pre-tax
profit, which was up 45% from the previous year.
Once again, Fords flagship F-series pickup

trucks were the best-selling vehicle in the U.S, a
streak that has lasted 34 years in a row.
Ford then delivered its bestquarterly

performanceever by earning $3.8 billion in pre-
tax profit in the first quarter. Ford has
successfully expanded profit margins across
multiple geographic markets.
Source: Ford 1st Quarter 2016 Earnings

Presentaton
Last quarter, Ford realized record margins in

North America, and has achieved profitability in
Europe for four consecutive quarters. Overall,
Fords 9.8% automotive profit margin last
quarter was its best ever. This year, Ford expects
to generate profitability across all geographies

except South America.
Investors are doubting whether Fords

momentum can continue much longer. The fear
is that rising interest rates and gas prices could
make Fords recent growth unsustainable going
forward. This pessimism is evident by the fact
that Ford stock trades for a price-to-earnings
multiple of just 5 (yes, just 5!).
For what its worth, Ford management expects

2016 to be another very strong year, with results
at least comparable with last year.
If the company can maintain last years level of

profitability, the company will likely approve
another significant special dividend next year, in
addition to its current 4.5% dividend.
In early 2016, Ford distributed $1 billion to

investors as a special dividend, and reiterated its
intent to continue paying special dividends if it
generates enough profit.
GeneralMotors
Date Founded: 1908
CAGR Since November 2010: -0.8%
Like Ford, General Motors has benefited from

fundamental tailwinds including low gas prices
and low interest rates.
However, General Motors stock has not provided

positive returns, even after emerging from
bankruptcy. This was due largely to the faulty
ignition switch scandal, which resulted in a
$900 million penalty last year, and the after-
effects of this have lingered ever since.
General Motors total revenue declined 2.3% last

year, and sales are up only slightly since 2012.
The good news is that the company has enjoyed

some positive momentum so far this year.
GM earned $2 billion in first-quarter profit,

more than double the $0.9 billion profit earned
in the same quarter last year. Earnings per
share, adjusted for one-time items, soared 47%
year over year. Both earnings and profit margin
set a record in the first quarter.
General Motors is improving both in the U.S.

and abroad. North America generated record
earnings last quarter, and the company broke
even in Europe, reversing a $200 million loss in
the prior-year quarter. Its stronger level of
profitability, while not currently being
appreciated by the market, means the company
can return more cash to shareholders.
General Motors stock holds a cheap price-to-

earnings ratio ofjust4 based on both trailing
and forward earnings per share, and it has a very
high dividend yield of 5.0%.
The company raised its dividend by 5% this year.

If its earnings continue to grow, the valuation
multiple could expand. Combined with the
dividend, General Motors could generate much
higher returns than it did since 2010.
IBM
Date Founded: 1911
IBM is a company in transition. For many years,

IBM was a dominant player in technology
hardware. But as growth and profitability in
hardware eroded over the years, IBM was forced
to shift focus to higher-growth areas.
It has done this by building its cloud, mobile,

and big data businesses. While IBMs
turnaround has taken a long time to materialize
revenue has declined for 16 quarters in a row
it is gradually seeing signs of progress.
IBM groups its higher-growth businesses into a

single unit called the strategic imperatives.
Collectively, these businesses generated $29.8
billion of revenue over the past four quarters,
and now represent 37% of IBMs total revenue.
Source: 2016 IBM Business Perspectives

Presentation
This is a good sign for IBMs turnaround because

these segments are growing at high rates. Last
quarter, total cloud revenue soared 34% year
over year. Mobile revenue nearly doubled last
quarter, while revenue from security increased
18%.
IBM is not generating high levels of earnings

growth, but the good news is it may not need to.
Conceivably, IBM could still generate annualized
returns at least on par with its average returns
over the past 54 years if it simply keeps earnings
intact.
IBM generated $14.92 in adjusted earnings per

share last year, which is an implied 10% earnings
yield based on IBMs current share price.
IBM stock is very cheap. It has a price-to-

earnings multiple of just 10, and a 3.6% dividend
yield. IBM returned $9.5 billion of cash to
investors last year, including $4.6 billion of
share repurchases and nearly $5 billion of
dividends. IBM has increased its dividend for 20
years in a row.
InternationalPaper
Date Founded: 1898
International Paper is in a difficult transition

period, but it has navigated a tough climate
admirably. The stock is down 18% in the past
two years, which has weighed on its cumulative
shareholder returns, due to a structural change
in the paper products industry.
Simply put, people arent using paper products,

at home or at the office, nearly to the extent that
previous generations did. The growth in online
functions such as e-mail means less demand for
paper products. In the boldest prediction of
2016, I believe computers are here to stay.
But International Paper has repositioned itself

with a focus on streamlining itself to maximize
profitability. The company has averaged $1.8
billion in free cash flow over the past five years,
and last years earnings per share of $3.65 was
its highest total in 20 years.
Furthermore, last year International Paper

achieved 11% returns on capital, and it has
marked six straight years in which it has
generated returns on capital greater than its cost

of capital.
It has improved its balance sheet to slim down

and improve efficiency. For example, last year
International Paper sold its 55% China joint
venture, which removed $400 million from its
balance sheet.
These efforts to reduce debt and cut costs have

allowed International Paper to resume dividend
growth. After slashing its dividend by 90% in
2009, during the depths of the financial crisis,
International Paper has raised its dividend at
double-digit rates for four years in a row.
The stock trades for a price-to-earnings multiple

of 17, which is a slight discount to the S&P 500
Index, and International Paper offers a hefty
4.1% dividend yield, which is double the market
average yield.
Merck
Date Founded: 1891
Merck is a U.S. pharmaceutical giant. The

company currently has a market cap of $158
billion. This makes Merck the 4th largest
publicly traded health care corporation in the
world according to Finviz.
It has oriented its portfolio towards

biotechnology in recent years, and has made
significant progress in emerging new therapeutic
areas. The companys product pipeline is shown
below:
Source: Merck 2016 JP Morgan Health Care

Conference Presentation
For example, last year Merck received expanded

indications for melanoma and non-small-cell
lung cancer drug Keytruda. It also received FDA
approval for chronic hepatitis C drug Zepatier,
and also for Bridion, an injection which helps
reverse neuromuscular blocking agents during
surgery.
Merck has had patent protection issues of its

own, which is why it has also turned to
acquisitions in addition to internal R&D.
Worldwide sales last year were flat on a constant
currency basis. Sales declined 6% including
currency effects.
Merck is reshuffling its pipeline to focus on areas

that the company deems will be higher-growth
going forward, including cancer, hepatitis C, and

Alzheimers disease. To invest more aggressively
in these areas, the company has divested non-
core assets, including the sale of its international
ophthalmics business last year. Merck also sold
its consumer care business to Bayer (BAYRY) in
2014, for $14.2 billion.
On the plus side, Merck still generates a lot of

cash. The company is very shareholder friendly;
it puts this cash to good use. Merck returned
$9.3 billion to investors last year in combined
dividends and share repurchases, and it
increased its dividend by 2.2% in November.
The company grew adjusted earnings per share
by 2.8% last year.
Merck currently pays a $1.84 per share annual

dividend, which amounts to a solid 3.1%
dividend based on its June 27 closing price.
Until sales and earnings return to stronger
growth, Merck at least pays investors well to
wait.
Nordstroms
Date Founded: 1901
CAGR Since July 1986: 8.6%
Over the past year, Nordstroms returns have

fallen well short of its average return over the
past 30 yearsthe stock has lost half its value in
the past 12 months.
The company has been caught up in the broader

downturn in physical retail, brought on by the
emergence of online retail, where Amazon.com
(AMZN) has dominated.
Essentially, any product offered at department

stores could be bought on Amazon, typically for
a lower price tag. And, the other huge advantage
for Amazon is that it offers the convenience of

shopping at home, and Amazon also offers two-
day shipping for subscribers of its Prime service.
Amazons revenue increased 22% in the fourth

quarter last year, and revenue growth then
accelerated to 28% in the first quarter 2016. As a
result, it is easy to see why brick-and-mortar
retailers are struggling.
Nordstroms earnings per share fell 64% last

quarter. Earnings per share clocked in at $0.26
per share, which missed estimates by a huge
amount. Analysts had expected $0.47 per share.
Nordstroms same-store sales, a crucial metric
for retailers that measures sales at locations
open at least one year, dropped 1.7%. This was
the first quarterly decline in comparable sales in
seven years for Nordstrom.
Nordstrom is seeing a measure of success with

its popular Nordstrom Rack off-price brand, but
this was more than offset by continued weakness
at its core Nordstrom banner.
The good news is that Nordstrom stock is cheap,

and could be attractive for bargain hunters. The
stock trades for a price-to-earnings multiple of
13, and it offers a 3.6% dividend yield.
ONEOK
Date Founded: 1906
CAGR Since July 1985: 13.9%
ONEOK is the General Partner and owns 41% of

ONEOK Partners LP OKS, which owns and
operates a major natural gas liquids system.
ONEOK has a huge asset base, which includes 55

billion cubic feet of natural gas storage capacity;
37,000 miles of pipelines; and 840,000 barrels
per day of natural gas liquids fractionation

capacity.
Source: ONEOK 2016 Investor Update

Presentation
Natural gas prices fell significantly over the past

two years, which established a significant
headwind for Oneok. The very difficult climate
caused revenue and earnings per share to
decline by 36% and 22%, respectively, in 2015.
One positive note is that, since Oneok is a
midstream company, it is not as reliant on
changes in commodity prices as companies in
the upstream exploration and production
segment. Oneok primarily operates fee-based
contracts, meaning its assets collect fees based
on volumes transported and stored.
Continued growth in volumes has kept Oneok

profitable through the deep downturn in
commodity prices. Natural gas and natural gas
liquids volumes rose 18% and 6%, respectively,
in the first quarter. Oneoks earnings per share
soared nearly 40% in the first quarter, from the
same quarter last year. Another factor boosting
earnings is that the company operates a high-
quality network of assets and it can increase
rates regularly. In the first quarter, Oneok raised
its average fee rate in the natural gas gathering
and processing segment by 23% from the
previous quarter.
Oneok maintained a 1.3 distribution coverage

ratio, meaning it generated 30% more cash flow
than it needed to pay its first-quarter
distribution. With a 5.2% dividend yield, which
is significantly above the S&P 500 average
dividend yield, it is critical for Oneok to generate
enough cash flow to sustain its distribution.
Pfizer
Date Founded: 1849
Pfizer is the worlds largest pharmaceutical

company and has a long track record of
rewarding shareholders. The company recently
declared its 311th consecutive dividend,
amounting to a streak of 77 years.
Pfizers financial performance over the past five

years has been spotty. The company generated
$61 billion in revenue in 2011, but sales have
steadily fallen to $48.85 billion last year.
The major reason for this is generic competition.

Pfizer lost patent protection on its flagship
Lipitor cholesterol drug in that time period,
which was significant for the company as Lipitor

itself once raked in $10 billion in annual sales.
This means Pfizer is a company in transition. It

has responded to its slowing growth by turning
to acquisitions, both large and small, to
replenish its pipeline. Pfizer bought Wyeth in
2009 for $68 billion, acquired Hospira last year
for $17 billion, and recently bought Anacor
Pharmaceuticals (ANAC) for $5.2 billion.
The core strategy of these moves is to boost

growth quicker than the company could
organically. If Pfizer were to pursue developing
its own pipeline from scratch, it would be a very
costly and time-consuming effort. Instead, Pfizer
has decided it can simply buy growth to
immediately grow revenue, and pursue earnings
growth through cost synergies.
Management expects the growth initiatives it has

employed over the past several years to finally
see results this year. Full-year revenue is
expected to grow to $49-$51 billion, which
would represent the first year of revenue growth
for the company since 2011.
While the company works to return to growth, it

offers investors a hefty 3.3% dividend yield.
PhilipMorris
Date Founded: 1847
CAGR Since April of 2008: 13.3%
Philip Morris (PM) has compounded investor

wealth at 13.3% a year since April of 2008 (the
period.
Philip Morris price history is cut short due to

the split of Altria (MO) and Philip Morris in
2008. Altria controls the Marlboro (and others)
cigarette brand in the United States, while Philip
Morris controls international sales of the
Marlboro (and other) cigarette brand.
The tobacco industry has been through well

documented struggles. Cigarette consumption is
slowly declining globally as more people
prioritize long-term health over the short-term
nicotine buzz of a cigarette.
This sounds like bad news for Philip Morris

And yet the company has absolutely trounced
the market since 2008, generating returns of
13.3% a year for investors.
How is this possible?
For one, Philip Morris has the strongest

cigarette brand in the world in Marlboro. The
company is slowly gaining market share in many
key global markets.
Source: Philip Morris 2016 Annual Shareholder

Meeting Investor Presentation
Also, the company is making efficiency gains and

raising prices. Philip Morris is veryshareholder
friendly. The company repurchases a significant
amount of its shares. Reducing share count,
gaining market share, and increasing margins
morethanoffset slow cigarette volume declines
on an industry level.
Philip Morris stock currently has a high dividend

yield of 3.9%. The companys high dividend
yield combined with expected earnings-per-
share growth of around 7% a year going forward
give Philip Morris shareholders expected total
returns of 11%+ a year.
PrincipalFinancialGroup
Date Founded: 1879
CAGR Since October 2001: 7.2%
Principal Financial Group is a diversified

financial services company. It offers a wide
range of products and services including
insurance, retirement planning, and asset
management.
As a financial institution, Principals earnings

have been weighed down this year by low
interest rates. First-quarter diluted earnings per
share fell 10% year over year.
However, the company continues to generate

high levels of profitability..
Last year, Principal increased earnings per share

by 11%. This allowed it to raise its dividend by
8% in the first quarter this year after a 17%
dividend increase last year. Principal also
repurchased 5.5 million shares in 2015, further

adding to its capital returns.
Last year, Principal closed on its $335

acquisition of AXAs Hong Kong pension. This
helped add to Principals growth last year, as did
a 4% increase in fee income. These moves have
helped the company continue to grow despite
the prolonged period of low interest rates.
Principal appears to be an attractive choice for

value and income, across several metrics. The
stock is cheap, with a trailing and forward price-
to-earnings multiple of 10 and 8, respectively.
This is about half the valuation of the S&P 500.
In addition, the stock trades for 1.1 times book

value and offers a 3.7% dividend yield. The stock
is cheap, as investors have become more
pessimistic of insurance stocks in general.
Still, Principal should have little trouble

achieving its historical rate of return going
forward. If it can simply increase earnings by 3%
per year, it will return more than 7% a year after
taking account of the dividend. And, any
expansion in the valuation multiple would be a
bonus.
Procter&Gamble
Date Founded: 1837
Procter & Gamble (PG) has compounded

investor wealth at 11.8% a year since 1970 (the
period.
Every $1 invested in Procter & Gamble in 1970 is

worth $384 (if dividends were reinvested)
today. The company is a wealthcompounding
machine.
Procter & Gamble has 21 brands that generate

over $1 billion in annual sales. The table below
lists many of the companys well-known
consumer brands by segment, along with sales
and earnings numbers for fiscal 2015.
Procter & Gambles growth has stalled since

2008. The company had earnings-per-share of
$3.64 in 2008. In 2015, earnings-per-share
were just $4.02. Share repurchases were the
only reason earnings-per-share did not decline.
Revenue declined by 8.7% from 2008 through
2015. Net profit declined 4.5% over the same
period.
Procter & Gambles weakness over the last 7

years is due to a lack of focus. The company has
generated net profits of over $10 billion ayear
every year since 2007. This gives Procter &
Gamble the ability to outspend its competition.
This competitive advantage is diluted when

advertising spend is spread over too many
brands. Procter & Gamble has shed its non-core
brands in recent years. This bodes well for
shareholders.
The company is now expected to earnings-per-

share somewhere between 6% and 8% a year
going forward. This growth combined with the
companys dividend yield of 3.1% gives
shareholders expected total returns of between
9% and 11% a year going forward close to the
companys long-term historical CAGR.
PrudentialFinancial
Date Founded: 1875
CAGR Since December 2001: 8.8%
Prudential Financial is a major financial services

company, with more than $1 trillion in assets
under management. Prudential is primarily an
insurance company, engaged in life insurance,
annuities, retirement products, and other
investment services.
Insurance companies have an excellent business

model. While most businesses have one main
income stream, insurance companies make
money in two ways:
1. Prudential earns income by writing and

collecting premiums
2. And also by investing its large sums of
accumulated capital
Similar to banks, insurance companies also rely

on a wide net interest margin to increase profits.
With interest rates near historic lows, Prudential
has suffered with weak investment income.
Still, the company performed very well last year

thanks to strong results in its core businesses.
Adjusted earnings rose 9% for the full year.

Prudential saw growth across asset
management, and ended the year with record
assets under management. In addition,
Prudential benefited from strong growth in life

insurance policy sales and group insurance sales.
This demonstrates that insurance is a highly

lucrative business. Prudential created
shareholder value last year by increasing book
value per share by 4%.
This growth allows Prudential to return

significant amounts of cash to shareholders.
Prudential increased its dividend by21%last
year and increased its share repurchase
program by 50% for 2016, to $1.5 billion.
Prudential could generate very strong

annualized returns for shareholders going
forward.
The stock is very cheapshares trade for a

trailing and forward price-to-earnings multiple
of 6 timesand the stock offers a 3.9% dividend
yield.
PublicServiceEnterprise
Group
Date Founded: 1903
Public Service Enterprise Group is a diversified

utility. It has shifted its business focus in recent
years to regulated operations. For example, the
regulated utility business now represents more
than half of the companys annual operating
earnings.
Source: PSEG American Gas Association

Investor Presentation
This will continue going forward, as more than

70% of Public Services future capital
expenditures are for its regulated industry. This
focus on regulated operations provides stability,
which is the primary goal of a utility.
Public Service is also diversifying its energy

sources.
The company has made great strides in solar

power generation. Last year, Public Service
completed solar projects in California and
Maryland, and acquired projects in Utah,
Colorado, and North Carolina. In all, Public
Services solar portfolio now comprises 16
utility-scale projects across 12 states,
encompassing 277 megawatts of capacity.
Public Service has generated excellent returns

for shareholders over the long term, thanks to its
earnings and dividend growth.
Last year, the company grew earnings per share

by 5.4%, after 7% earnings growth the year
before. Public Service has grown earnings per
share for three years in a row.
Along with its earnings growth, the company

raises its dividend regularly. Public Service
increased its dividend last year, which was the
12th raise in the past 13 years.
Public Service pays a $1.64 per share annualized

dividend which results in a 3.6% dividend yield,
and the dividend is likely secure. The company
maintains a manageable 53% dividend payout
ratio as a percentage of trailing 12 month
earnings per share.
Target
Date Founded: 1902
CAGR Since April 1983: 12.0%
Target has generated double-digit returns for

decades on end. It has been very successful in
creating wealth for its shareholders.
In recent years, however, the company hit some

significant bumps in the road that it is still trying
to recover from. In December 2013, Target
announced it had been hacked, and millions of
holiday-season shoppers personal information
was exposed.
This resulted in a major public relations

headache and Target suffered falling sales over
the following year. Targets problems were
exacerbated by its ill-fated expansion in Canada.
Target experienced success initially, but
Canadian consumers simply did not adopt the

Target concept. Target closed all of its 133
Canadian stores in 2015, a venture that cost the
company $2 billion.
The good news is that shoppers eventually

gravitated back to Target, and the company
helped itself by investing in its digital
capabilities.
Last year, Target grew comparable sales and

adjusted earnings per share by 2% and 11%,
respectively. Sales growth was led by Targets e-
commerce platform, which posted 34% revenue
growth in the fourth quarter.
Target has done well to start 2016, even though

the retail climate has been tepid so far this year.
Targets comparable sales rose 1.2% last quarter,
which is commendable as many retailers are
seeing comparable sales fall this year. Adjusted
earnings per share jumped 16% last quarter,
thanks to 23% growth in e-commerce sales.
Target is a Dividend Aristocrat, having raised its

dividend each year for the past 45 years. It has
an incredible track record of steady dividends
Target has paid 196 quarterly dividends without
interruption.
Setbacks have made the company relatively

cheap on a historical basis. Targets dividend
yield is near all time highs.
The companys current dividend yield is 3.3%.

Now is a good time to buy into this high quality
Dividend Aristocrat. Targets mix of growth,
dividends, and safety makes it a favorite of The 8
Rules of Dividend Investing.
TheDowChemicalCompany
Date Founded: 1897
Dow is in a difficult period, due to the downturn

in the agriculture and commodities sectors. The
company suffered a 16% drop in revenue last
year.
However, the company managed to grow

adjusted earnings per share by 12%, thanks to
cost cuts and stock buybacks. Dow repurchased
$2.7 billion of its own stock in 2015.
Even though growth has slowed due to the

slowdown in global economic growth, Dow
remains consistently profitable with high returns

on capital. The company generated $7.5 billion
in operating cash flow last year. It expanded
return on capital by 130 basis points for the year,
to 12.1%.
Dows major growth catalyst going forward is its

pending $130 billion merger with Dupont (DD).
By combining the two chemicals giants, it will
create an industry behemoth with $90 billion in
annual revenue. And, as is typical in these types
of mega-deals, the two companies will likely
realize significant cost synergies to boost future
earnings growth.
Dow has made a number of moves in recent

weeks to expand the projected savings. The plan
is to merge with Dupont and then split into three
independently-traded companies, in the
agriculture, material science, and specialty
products markets.
Dow expects to generate $3 billion in cost

synergies from the merger, along with $1 billion
of what the company terms growth synergies,
which are additional cost-cutting measures.
Dow Chemical stocks is cheap, with a price-to-

earnings ratio of 9. And, the stock pays a $1.84
per share dividend which yields 3.7%.
WellsFargo
Date Founded: 1852
Wells Fargo is one of the countrys biggest banks

its the nations biggest mortgage originator.
As such, it is tethered to movements in U.S.
interest rates.
The continued low-rate policy employed by the

Federal Reserve, to boost economic growth, has
had a distinctly negative effect on Wells Fargo.
When rates are low, Wells Fargo makes less

money on the difference between interest paid
on deposits versus the interest earned on longer-
dated loans. This is referred to as net interest
margin. The prevalence of low rates has caused
Wells Fargos net interest margin to contract,
and its valuation multiple has followed suit.
For example, last year Wells Fargo generated

$86 billion of revenue and $23 billion of profit.
Revenue and earnings per share grew just 2%
and 1%, respectively, from the prior year. In light
of disappointing U.S. economic data, the Brexit
vote in 2016, and the likelihood that interest
rates will remain low for an extended period,
investors have become increasingly bearish on
the financial sector.
While low rates slow growth in the company,

Wells Fargo is still performing well relative to
peers.
Source: Wells Fargo 2016 Investors

Presentation Financial Overview
Despite this, pessimism has pushed down Wells

Fargos valuation to a price-to-earnings ratio of
just 10. In addition, Wells Fargos dividend yield
has been elevated to 3.2%.
But these levels could represent a great buying

opportunity for long-term investors.
While the short-term environment could

continue to be difficult, with periods of major
volatility, it stands to reason that interest rates
will rise over the long term. Rates are at
historically low levels, and despite geopolitical
risk rearing its ugly head once again, the U.S.
economy remains on a fairly firm track of
modest growth.
If and when rates do rise, it will be a significant

tailwind for the U.S. banking industry, and in
particular Wells Fargo.
WesternUnion
Date Founded: 1851
CAGR Since October 2006: 1.4%
The Western Union Company revolutionized the

financial technology industry by enabling cross-
border payments. It is now a global leader in its
industry, with the capability to move money in
130 currencies and a presence in 200 countries
and territories across the world.
That being said, the stock has not performed

well over the past several years, because growth
has slowed considerably.
Western Unions revenue is virtually unchanged

over the past five years. Western Union
generated $5.4 billion in 2015, and the same
amount in 2011. In that time, it has successfully

grown earnings per share from $1.57 in 2011 to
$1.67 last year, due primarily to share
repurchases.
Still, Western Union is highly profitable and

generates significant cash flow. The companys
operating cash flow was $1.1 billion last year, of
which it returned $817 million to shareholders
in share repurchases and dividends.
If the company can return to revenue growth, it

could receive a higher valuation multiple. In
order to accomplish this, Western Union is
investing in new technological capabilities to
capture growth in emerging areas of financial
technology, such as mobile payments.
A major part of this growth strategy involves

further expansion in emerging markets. To that
end, last year Western Union signed an
agreement with Mexicos Grupo Financiero
Banortes UniTeller network that allows
consumers to send money directly to more than
60 million bank accounts in Mexico.
Western Union is an attractive stock pick for

value and income, at a price-to-earnings ratio of
12.2 and a 3.3% dividend yield.
Western Union has not performed well over the

past decade. However, future returns could be
fairly strong, given the cheap valuation and high
dividend.
Weyerhaeuser
Date Founded: 1900
CAGR Since May 1973: 6.6%
Weyerhaeuser is a real estate investment trust,

or REIT, which focuses on timber-related
properties including timberlands and wood

products. It owns and operates nearly 7million
acresoftimberlands, mostly in the United
States.
As a REIT, the stock is an attractive choice for

income investors, as REITs are required to
distribute at least 90% of their cash flow.
Weyerhaeuser stock currently pays a $1.24 per
share dividend, which yields 4.0%.
But Weyerhaeuser has had a difficult period in

recent years. To an extent, it is suffering from
the same headwinds as International Paper
lower demand for paper products. Last year,
Weyerhaeusers earnings, adjusted for one-time
items, decreased 17%. Business conditions have
not improved to start 2016diluted earnings per
share fell 35% in the first quarter, year over year.
In response, Weyerhaeuser has turned to merger

and acquisitions activity to reposition itself for
future growth. It merged with Plum Creek
Timber, and it after a lengthy period of
evaluating strategic options for its cellulose
fibers business, the company sold the business
to fellow blue chip stock International Paper for
$2.2 billion.
The changes in the company over the last several

years are shown in the image below:
Source: Weyerhaeuser 2016 Investors Meeting

Presentation
This was one of the companys worst-performing

business segments. Due to falling prices for pulp,
lower sales volumes, and higher maintenance
costs, the cellulose business lost $20 million in
the fourth quarter last year. While the business
returned to profitability in the first quarter, sales
fell 10% from the fourth quarter.
The company has aggressively cut costs to boost

profitability, which allowed Weyerhaeuser to
raise its dividend by 7% last year.
WilliamsCompanies
Date Founded: 1908
CAGR Since December 1981: 9.2%
Williams Companies is a large energy company

operating in the midstream business. Midstream
companies own and operate oil and gas
transportation and storage assets including
pipelines and terminals. The company operates
more than 13,000 miles of natural gas pipelines
in the U.S.
Williams has had a brutalyear, due to the

downturn in commodity prices, as well as its
failed $33 billion merger attempt with Energy
Transfer Equity (ETE). On June 24, a Delaware
court judge ruled that Energy Transfer Equity
could terminate the merger agreement.
Williams stock is down more than 60% in the

past year as its fundamentals have deteriorated.
The chart below is not pretty:
Source: Finviz
In 2015, Williams reported a net loss of $557

million, which completely reversed a $2.1 billion
profit from 2014. Last year, Williams dividend
coverage ratio fell below 1.0. The previous year,
its dividend coverage ratio was 1.2 times.
Unfortunately, the companys fundamentals

continued to erode to start 2016. Williams
reported a net loss of $65 million in the first
quarter, compared with a $70 million net profit
in the year-ago period. Williams dividend

coverage deteriorated once again, to 0.89 times
in the first quarter.
Williams has a skyhighdividendyieldof12.4%

based on its ~$22 stock price.
However, this is because the stock price has

collapsed, and not because of underlying
dividend growth. This is an important
distinction, as a sky-high dividend yield is often
a sign of trouble. Williams Companies may
currently be a blue chip stock thanks to its
history, but the company is a high risk
investment.
Investors should be aware that the company is

losing significant amounts of money, and since
no company can operate at a loss forever, there
is a distinct risk that the current dividend is
unsustainable.
XcelEnergy
Date Founded: 1909
CAGR Since September 1985: 10.1%
Xcel Energy is a diversified electric utility. It

generates power from a wide range of energy
sources, including fossil fuels such as coal, but
also nuclear and natural gas, as well as
renewable forms of energy such as solar, wind,
and biofuels. It offers electricity service to 3.5
million customers and natural gas service to 2
million customers across 8 U.S. states.
The company has a profitable business and

generates steady growth.
Last year, Xcel grew core earnings per share by

3%. Going forward, management has set a goal
of 4%-6% growth in annual operating earnings,
5%-7% dividend growth each year, and a target

dividend payout ratio of 60%-70%.
Last year it achieved success on many of these

fronts. 2015 was the 11th consecutive year in
which the company met or exceeded its internal
forecast. In addition, Xcel raised its dividend by
6% in 2015, representing the 12th consecutive
year of a dividend hike.
Xcel Energy has generated double-digit

annualized returns over the past 30 years.
Going forward, its returns will be heavily

comprised of dividends. The stock has a $1.36
per share annual dividend, which offers a 3.1%
current dividend yield. Xcel may not be able to
generate enough earnings growth to continue
rewarding investors with double-digit returns.
And, expansion of Xcels valuation multiple is

doubtful. The stock currently trades for a trailing
and forward price-to-earnings multiple of 21 and
19, respectively. As a result, prospective
investors may want to wait for a better buying
opportunity before initiating a position.
Xerox
Date Founded: 1906
Xerox has generated subpar returns over the

past 39 years, due to the structural erosion of its
core business. The companys history makes it a
blue chip stock, but its future growth is far from
guaranteed.
Workplace based electronics like printers and

fax machines are not used nearly to the extent
they used to, as a greater percentage of work is
done over the Internet. This has caused a
deterioration in Xeroxs sales and profit for an

extended period.
For example, Xerox generated $22.8 billion of

revenue and $1.08 in adjusted earnings per
share in 2011. Five years later, and the company
is still in decline.
Last year, Xerox generated $18 billion of

revenue and $0.98 per share in earnings. From
2011-2015, revenue and earnings per share
declined 21% and 9%, respectively. Revenue has
declined every year since 2011.
A centerpiece of Xeroxs turnaround is that it

will split itself into two separate, publicly traded
entities, by the end of 2016. It will split the
document technology business from the
business process outsourcing business.
Management believes that separating the two

businesses will allow each team to more
efficiently focus on their unique client needs.
The rationale is that the two independent
companies could collectively receive a higher
valuation multiple than the single entity does
today.
An overview of the split businesses is shown

below:
Source: Xerox New Path Forward
Indeed, Xerox stock trades for a forward price-

to-earnings multiple of 8.5 and offers a 3.3%
dividend yield. If the company is able to
successfully return to growth, the stock could
handsomely reward investors who are buying at
these levels.
However, this is not guaranteed. Splitting the

company up into two pieces wont change the
core issue, which is the decline in printing and
related equipment. Xeroxs total revenue
declined 4% in the first quarter, primarily
because revenue fell 10% in the document
technology business.

2016 Blue Chip Stocks List

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2016 Blue Chip Stocks List

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8/30/2016 2016 Blue Chip Stocks List: 3%+ Yields & 100+ Year Histories - Sure Dividend Sure

Histories - Sure Dividend Sure Dividend

2016 Blue Chip

High quality businesses with shareholder

But finding these investments is not always easy

This guide makes locating high yielding blue

The long-term performance and current events

Some of their performances are pedestrian,

Already know about blue chip stocks? Click

This article examines every business in the S&P

Blue chip stocks should pay reliable, above

Stocks with 100+ year histories are generally

1. Only look at stocks with yields at or above 3%

This article makes identifying high quality blue

The spreadsheet can be sorted using dividend

Keep reading this article for detailed analysis on

19. Pfizer (PFE)

Altrias performance since 1970 is nothing short

Altria (formerly Philip Morris prior to 2008) is

The companys excellent performance is due in

Source: Altria 2016 Annual Shareholders

I want to be clear: There is noway Altria can

But that doesnt mean investors should expect

Altria uses high dividends, efficiency gains, and

Altria also has a potential cash windfall. Altria

On the downside, other investors have taken

The company is currently trading for a forward

Altria makes an excellent long-term holding, but

American Electric Power is a regulated utility in

Last year, American Electric generated $16.5

The company got off to a slow start this year

Operating earnings per share declined 20% in

It expects continued success in its transmission

Operating as a regulated utility provides stability

help the company steadily grow earnings from

Its solid profitability should allow it to continue

Based on its earnings per share last year and

BB&T is a large regional bank with a $25+

Source: BB&T 2016 Barclays Presentation

As a bank, BB&T needs higher interest rates to

However, the company has a strategy to grow,

In 2014, BB&T acquired Susquehanna

Acquisitions helped boost BB&Ts revenue by 4%

in traditional banking activities which are

Despite these acquisitions, BB&Ts earnings per

On the plus side, BB&T maintains a strong

Its consistent profitability has allowed BB&T to

BB&T has achieved 10% annualized returns over

BB&Ts dividend has been a significant driver of

Boeing has generated 12.6% returns

Despite being around for 100 years, Boeing has

Source: Boeing 2016 Investor Conference

Boeing is benefiting from the boom in global

Boeing has repositioned its business away from

Boeing grew commercial aircraft deliveries by

With its impressive cash flow, Boeing returns

And it had a $480 billion backlog to start 2016,

Boeing stock trades for a price-to-earnings ratio

CenterPoint Energy is a well diversified energy

The utility segment comprised 65% of

CenterPoint is mostly a utility. As such, its

As a utility, returns generally would be in the

earnings growth and its 4.4% dividend yield.

But in a rising-rate environment, returns may be