It's a Buyers’ Market: 20 A Rated Low Debt Blue Chips to Consider
When markets get as volatile as they’ve been lately, it’s extremely difficult for investors to avoid our innate “fight or flight” response. In our states of heightened emotion (fear) our logical minds try to tell us that we are witnessing an incredible buying opportunity for long-term oriented investors. However, our emotions make it very difficult to pull the trigger. Moreover, with markets as uncertain as they’ve been lately, there is no way for us to know whether the worst is over or not.
On the other hand, it behooves us to remember that picking the exact top or bottom is only possible by chance. Therefore, to me at least, it’s always been easier to recognize attractive values when they manifest and accept that as more than good enough. As a result, my basic strategy is that when I can identify attractive value, especially in extremely high-quality companies, I am willing to invest regardless of whether they fall a little further, or even a lot, or not.
Moreover, I also find it easier to be courageous when I can identify extremely high-quality companies at attractive valuations. This is important, and a strong contrast to what we experience when the markets brought us a similar opportunity during the great recession of 2008 and 2009. I would like to remind investors that there was a 4 ½ year period starting in March 2009 which ended in October 2013 when stocks making up the S&P 500 were very attractive. I have highlighted in yellow that timeframe on the earnings and price correlated FAST Graph of the S&P 500 below:
On the other hand, I want to also point out that the years 2014 until just recently in 2020 the S&P 500 was trading at a high valuation relative to fundamentals and historical norms. As a card-carrying diehard value investor, I for one found it very difficult to find attractively valued stocks over that period. On the other hand, it was not impossible because, as I’ve often stated, it is a market of stocks.
Moreover, I was even more frustrated because the highest quality bluest of blue chips were the stocks that the market was valuing the highest. As a result, it became much more difficult to find attractive investments of impeccable quality because the crème de la crème stocks were mostly overvalued. In short, as a value investor, I find bull markets troubling albeit very profitable. In contrast, I tend to be very comfortable in bear markets simply because I see value everywhere I look.
20 A Rated Low Debt Blue Chips to Consider
The following 20 companies I would rate amongst the highest quality blue-chip dividend growth stocks in the market. Thanks to the recent market crash, most high-quality dividend growth stocks once overvalued, have now become attractive. As a result, the criteria for my selection process was simple and straightforward. Since I now had value, I turned my focus to high-quality. Therefore, I searched for companies with consistent long-term records of increasing their dividends with credit ratings A rated or better and long-term debt to capital ratios below 40%.