rockymtnway

Does Buy-and-Hold Work on Major Blue Chips?

The dividend discussion is critical here since many of these companies work hard to raise dividends every year. A $1,000 investment in something like GE isn't just going to give you 4% for the next 10 years. That dividend is going to grow, year after year and after 10 years the yield is likely to be the equivelent of 10% based on your original investment. When you compound that with dividend re-investment, you're looking at safe investments that hold the potential of building a rather nice nest egg without a lot of trading fees or volitility. While I understand the appeal of picking nothing but fast moving winners, it's a riskier game with as many winners as losers. I believe a well diversified portfolio should contain both blue chips that are buy and hold investments (with dividend reinvestment, of course) and small caps with explosive growth. However, if you're not the type of have the patience and discipline to watch the small caps, then for gawd's sake, stay away from them.