Are blue chip stocks a good long term investment? how about short term

In My Humble Opinion
1

I dont know much about the stock market, but of what little i do know i know that Blue Chips are considered to be safe growth investments and that many of them pay dividends.

Does anyone have any charts that show blue chip annual growth rate over the last 50 years or so? I’m hoping/assuming its in the 6-9% range, but that is just a guess. Are Blue chips the best stock to pick if you want a safe, only mildly risky return? i know things like T-bills and bonds offer safer returns, but their yields barely surpass inflation. Then again i could be wrong as im researching it, and if i could get 90 day 10k T-bills at 9800 and do that 4x a year, then that is a 8% annual growth rate. But i dont know if 9800 is a plausible price, its probably closer to 9850, which is a 6% annual yield.

Also, if someone is after dividends should they buy blue chips with the highest dividend rate or invest in a mutual fund devoted solely to dividends? I’m guessing at least with the blue chips there is a good chance the stock will continue to grow but with a purely dividend stock there is no telling where it may go (could be a dot.com stock for example).

2

The Dow Jones Industrial Average is an average of 30 of the bluest of blue chips. Companies like Boeing, Kodak, Disney, Intel, etc. The stocks in the average change occasionally, but it gives you probably the best answer to your question.

On March 3rd, 1974, the Dow closed at 851.92. It closed yesterday at 10,595.55, an increase of 1243% over 30 years.

3

And incidentally, 1234% over 30 years is an annual growth of just 8.5%. There are investments out there that can do better, some much better, but the return vs. risk on blue chips, especially in the long run, is pretty attractive.

4

I think if you factored reinvesting dividends in there you would come out closer to 10-11% anually, which coincidentally is the historical average of the Dow.

5

Wow, 10-11% on a relatively secure stock investment is still doable?

I figured the inflation of the 80s and the boom of the 90s would give a false reading about what you could expect from investing in the 21st century.