There’s a lot to be said for investing with an eye to low-risk, megacap blue chips that pay a reliable dividend and don’t suffer that much price fluctuation.
But the problem with some of these lumbering blue-chip stocks isn’t just that they don’t offer much in the way of excitement or breakout potential … it’s that a lot of these blue chips are also showing a recent history of big underperformance.
These fallen giants lag with share appreciation, they offer below-average dividend potential and they still carry the risk of a capital loss even if they have no hope of breaking out.
It’s sometimes sacrilegious to talk about ditching these “widow and orphan” investments that many investors consider buying and holding forever. And I’ll admit that if you’re holding any of these stocks with a very low cost basis and are simply collecting a juicy dividend, then go right ahead holding.
But if you’re looking for the best place to put new money going forward, these fallen giants should certainly not be on your list.