3 Safe Dividend Blue Chips Retirees Can Trust

Summary

• The DK Phoenix Watchlist represents a collection of 60 world-class companies that are likely to rise from the ashes of this recession and soar to new heights.
• When a Phoenix stock becomes 21+% overvalued, it needs to be replaced with an equally high-quality blue chip with similar or superior fundamentals.
• Thursday and Friday I spent 10 hours replacing NEP, MA, V, ECL, DIS, and SYK with six better valued blued blue chips, including AMP, CHRW, and PPG.
• PPG and AMP are currently potentially good or very strong buys, and CHRW is slightly overvalued for this year's recessionary earnings. But that dividend champion Super SWAN stock could become a good buy if it falls to $62 or less during a short-term correction that is likely in the coming weeks.
• These 3 new Phoenix stocks have solid double-digit long-term return potential while offering generous, safe and steadily rising income that can make them great additions to a diversified and prudently risk-managed portfolio.
• This idea was discussed in more depth with members of my private investing community, The Dividend Kings. Get started today »

(Source: Imgflip)

This recession has caused over 180 companies to cut or suspend dividends since this recession began (including about 50 companies on the CCC list).

With dividend safety first and foremost on all income investors' minds, I created the Dividend Kings' Phoenix list.

This represents some of the highest quality world-class companies that are likely to rise from the ashes of this recession and soar to new heights, all while preserving or even growing dividends during the worst recession in 75 years.

(Source: "Dividend-A-Plenty" slide)

Here are the fundamental quality stats of the Phoenix list, which is the watchlist all Dividend Kings portfolios (and my retirement portfolio) are exclusively buying from during the Great Lockdown recession.

Phoenix Fundamental Quality/Safety Stats

• Average quality score: 10.2/11 Blue Chip quality vs. 9.6 average aristocrat.
• Average dividend safety score: 4.6/5 very safe vs. 4.6 average aristocrat.
• Average max portfolio risk cap recommendation: 6.8% vs. 7% or less for the highest quality blue chips.
• Average payout ratio: 53% vs. 62% industry safety guideline.
• Average debt/capital: 45% vs. 44% industry safety guideline.
• Average yield: 3.3% vs. 2.1% S&P 500 vs. 3.1% aristocrats (2.4% NOBL ETF).
• Average dividend growth streak: 24.4 Years (Graham Standard of excellent is 20+, aristocrats are 25+).
• Average 5-year dividend growth rate: 12.6% CAGR (doubled in last decade).
• Average long-term analyst growth consensus: 9.9% CAGR vs. 6.3% CAGR S&P 500 20-year average (thriving companies with faster-expected growth than the broader market).
• Average return on capital: 128% (very high quality according to Joel Greenblatt).
• Average return on capital industry percentile: 87% (wide moat/highest quality according to Greenblatt).
• Average 13-year median ROC: 114% (stable quality/moat).
• Average 5-year ROC trend: +5% CAGR (relatively stable quality/moat).
• Average S&P credit rating: A vs. A- average aristocrat.

I just spent 10 five hours working on two reports

Analyst’s Disclosure:I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Dividend Kings owns AMP and CHRW in our portfolios and plans to buy PPG this week.