Blue-chip stocks refer to stocks of stable companies that consistently make a profit and usually pay dividends. They are the best stocks if you're investing for income or for the long term. While blue-chip stocks are great to have in your portfolio, they often come at a high dollar-value. If you’re a small investor, there are good blue-chip stocks under $20.
Blue-chip stocks tend to be popular with risk-averse investors. You can find blue-chip stocks in any industry. Many blue-chip companies are components of the Dow Jones Industrial Average and the S&P 500 indexes.
Best blue-chip stocks under $20 right now
It’s hard to find blue-chip stocks under $20. Here are some low-priced stocks that could be good for your portfolio.
- Graphic Packaging Holding Company (GPK)
- Huntington Bancshares (HBAN)
- Ericsson (ERIC)
Graphic Packaging Holding Company is a leader in paper-based packaging. It serves the food industry. Currently, GPK stock goes for $17 per share and sports a dividend yield of about 2 percent. The company reported strong fourth-quarter results with earnings and revenue increasing YoY and beating the consensus estimates.
Huntington Bancshares operates regional banks. The business is stable and profitable. HBAN stock trades at about $14 and sports a dividend yield of 4 percent.
Ericsson is one of the top suppliers of telecom equipment. The global upgrade to 5G networks has opened up a huge revenue opportunity for Ericsson. In 5G, the company is well-positioned to capitalize on the political woes of its chief rival Huawei in western markets. The company's fourth-quarter results beat the consensus estimates. Ericsson stock is affordable at about $14.
Blue-chip stocks that pay dividends
Not all of the blue-chip stocks pay dividends, but many do. Some of the best blue-chip stocks that pay dividends are:
- The Coca-Cola Company (KO)
- Apple (AAPL)
- Microsoft (MSFT)
- Qualcomm (QCOM)
- Walmart (WMT)
Coca-Cola runs a profitable beverage business. As a result, it has been a reliable dividend source. The company has a track record of increasing its dividend payout every year—a practice it has kept for more than 50 years. Coca-Cola stock costs about $50 and offers a dividend yield of more than 3 percent.
Apple is one of the world’s leading smartphone companies. The company generates massive profits. Apple reinvests some of the profits in future growth, like expanding into the car business, and distributes the spare cash to shareholders. Apple stock trades at about $135 now and offers a dividend yield of more than 0.60 percent.
Microsoft is best-known for its Windows and Office software business. However, it's also one of the leading cloud computing companies. Microsoft generates a massive free cash flow and has been a reliable dividend source. Microsoft stock offers a dividend yield of more than 0.90 percent at $243 per share.
Walmart is the world’s largest retailer. The company responded swiftly to the tech disruption in its traditional retail business by going big on e-commerce to counter Amazon. Walmart has been one of the best stocks for dividend investors. The stock offers a dividend yield of 1.5 percent at $144 per share.
Can blue-chip stocks under $20 make a profit?
Many investors know that blue-chip stocks usually cost a lot, which leaves others wondering whether they can make a profit with blue-chip stocks that trade for $20 or less. A company labeled "blue-chip" is recognized as having a high-quality business, strong balance sheet, and great potential to continue growing.
A blue-chip stock might trade under $20 because the company split its shares to make them more affordable as its business remains strong as ever. For example, Apple implemented a 4-for-1 stock split in 2020 but that didn’t stop it from paying dividends. In addition to being cheap to buy, blue-chip stocks with dividends that trade under $20 also provide you with additional income.