Blue-Chip Dividend Stocks: Undervalued Opportunities for Long-Term Passive Income

The article discusses the value of buying blue-chip dividend stocks, specifically highlighting two cheap options. The author emphasizes the reliability of these stocks for long-term passive income, despite receiving pushback from readers who prefer other funds. The article encourages investors to consider these undervalued stocks as a potential investment opportunity.

In the realm of investing, blue-chip dividend stocks have long been regarded as a reliable source of passive income. Despite recent pushback from some readers who prefer other funds, these stocks continue to offer compelling long-term potential. This article highlights two undervalued blue-chip dividend stocks that could be worth considering for your investment portfolio.

The Appeal of Blue-Chip Dividend Stocks

Blue-chip companies are those with established business models and a track record of delivering solid returns over time. They typically operate in stable industries with steady demand for their services and possess strong economic moats through pricing power and barriers to entry. Investing in blue-chip dividend stocks can provide both reliable dividends and steady long-term growth, making them attractive to both seasoned investors and newcomers seeking a solid financial foundation [1].

Two Undervalued Blue-Chip Dividend Stocks

1. Progressive (NYSE: PGR)

Progressive is the second-largest automotive insurer in the United States. What sets it apart is its disciplined underwriting, strong brand, and direct-to-consumer model. The company relies heavily on technology and data to accurately price risk and was one of the original adopters of usage-based insurance, known as telematics. This approach utilizes driver data to price policies, contributing to Progressive's superior performance in underwriting profitability. Over the past 23 years, the company's combined ratio has averaged 92%, significantly lower than the industry average of 100%. This means Progressive earns an average of $8 in underwriting profit for every $100 in premiums [1].

2. S&P Global (NYSE: SPGI)

S&P Global plays a key role in markets, best known for its S&P 500 index. It also provides credit ratings, data, and analytics. Barriers to entry make it difficult to break into the credit ratings space, and S&P Global holds a 50% share of this market. The company's business model is resilient and scalable, with credit rating demand rising with bond issuance and recurring fees from ETF licensing and subscriptions. S&P Global has raised its dividend payout for 53 consecutive years, making it an exclusive member of the Dividend Kings club. While it offers a modest dividend yield of 0.7%, combined with its stock price appreciation, S&P Global has returned 15.3% annually over the past two decades [1].

The Case for Considering These Undervalued Stocks

While some readers may prefer other funds, these undervalued blue-chip dividend stocks offer compelling reasons to consider them as potential investments. Progressive and S&P Global have demonstrated strong underwriting and growth potential, respectively, and both offer defensive characteristics with upside potential. Their steady cash flows and wide moats make them attractive options for long-term passive income.

Conclusion

Investing in blue-chip dividend stocks can provide a reliable source of passive income. Despite recent pushback from some readers, Progressive and S&P Global stand out as undervalued options that could offer compelling long-term potential. Consider these stocks as part of a diversified investment strategy to build enduring, long-term wealth.

References

[1] https://finance.yahoo.com/news/4-no-brainer-blue-chip-121700462.html