Blue-Chip Stocks to Buy: China Mobile (CHL)
To some investors, only stocks in developed markets qualify as blue chip-stocks. And to others, even stocks like Swiss consumer giant Nestle (NSRGY) don’t count because they are headquartered overseas.
However, we live in the age of globalization, and that kind of thinking is a bit naïve. After all, how is Chevron (CVX) all that much different than Royal Dutch Shell (RDS.A) because they are headquartered on different continents?
The next geographic step for blue chip stocks, then, is to go beyond Europe and even into some major emerging markets where the stocks there are even more entrenched than their American peers.
One stock that fits this bill is Chinese telecom China Mobile (CHL), a massive company worth about $200 billion that commands over 750 mobile subscribers — twice the population of the entire united states!
You don’t get much more entrenched than that.
Furthermore, look at these dividend stats for CHL:
- Current dividend yield: 4.4% (based on its total 2013 payouts of roughly $2.01)
- Dividend payout ratio: 41% of projected 2014 earnings
- Dividend growth: 550% in 10 years, from 30.8 cents per share in 2003 to $2.01 last year
Sure, China Mobile is still growing as rural China continues to get connected. However this stock is already so huge that even adding a few million extra subscribers here and there doesn’t really move the needle dramatically on a percentage basis.
There is assuredly risk to all China stocks, but investors can take heart in the fact that CHL has largely been rangebound between $40 and $60 per share since the end of 2008 — and is currently in the middle of those bounds at just shy of $50 per share.
Don’t be fooled by the China hype. CHL has stability, a robust dividend and blue chip status despite its presence in this emerging market.