Two ASX Blue Chip Stocks to Watch in 2021

None of us need a reminder on how blue chip stocks performed last calendar year and we certainly don’t need to be reminded about their dividends.

Although we are only two weeks into the new year, the hopes that we could return to business as usual seem to be fading.

In fact, government officials seem more anxious and irrational than they did just a few months ago.

I say that from a business standpoint, of course — politicians just don’t understand business.

Regardless of that and what happened last year, I thought it time to spotlight some of Australia’s blue chip stocks that are worth keeping an eye on this year.

Over the past three months blue chip stocks have outperformed the benchmark ASX 200 by over 3%.

ASX 200 vs ASX Blue Chip Stocks

Source: Tradingview

Today we’ll take a look at a couple that not only have potential for nice returns, but also pay a nice dividend.

Sometimes it doesn’t pay to be different

Investors like blue chips stocks for two reasons: one, they typically produce nice, steady returns; and two, they pay some of the best dividends.

The two largest sectors on ASX are financials and materials.

And unsurprisingly this is where our two stocks operate.

The first is probably not a shocker.

BHP Group Ltd [ASX:BHP] has been one of the top dividend pays for several years, paying out $3.31 per share in 2019 when you could have bought in that year for just north of $33.

ASX BHP Share Price Chart - BHP Group Shares ASX

Source: Tradingview

Of course, the soaring iron ore price makes BHP an attractive stock too.

Despite Australia’s strained relationship with China, the Middle Kingdom just can’t seem to get enough of our iron.

A recent report from Goldman seems to think this is just the start of a much bigger cycle.

Fortescue Metals Group Ltd [ASX:FMG] is worth an honourable mention here as it was one of the few blue chips that did not cut its dividend last year. In fact, they grew in 2020.

Our second pick may not be considered a ‘blue chip’ to some, but I’m going to throw it in anyway — it’s close enough.

And that is Suncorp Group Ltd [ASX:SUN].

Increased borrowing by home buyers and small businesses, lower bad debt charges and loosened dividend controls have provided a boost in the outlook for payments by financial stocks.

Though investors typically look to the Big Four when discussing dividends, SUN could be one to keep an eye on this year.

ASX SUN Share Price Chart - Suncorp Shares ASX

Source: Tradingview

The reason is simple: it’s relatively cheap, undervalued (in my opinion) and is tipped to be the top-yielding bank on about 4.6%.

What to do next

If you haven’t already, I’d suggest reading our dividend report by our Editor, Greg Canavan. He’ll run through five Aussie superstars paying top dividends set to thrive in the post-pandemic era.

You can get that for free here.

Next, read our report on three deep value stocks that we believe are currently underpriced. These ASX gems could potentially deliver market-beating returns as the economy continues to recover recovers.

Check that out here.

Kind regards,

Lachlann Teirney
For The Rum Rebellion

Lachlann Tierney is a writer for The Rum Rebellion and has been investing for nearly a decade. With a Masters of Science from the London School of Economics, he brings a sound understanding of global markets to his writing. Lachlann is interested in emerging technologies, energy solutions and helping people invest their money wisely. 

The Rum Rebellion