Strategy
Blue Chip
Australia

ASX Blue Chip Strategy

1 Jul 2020
By
Based on the popular US strategy, ‘The Dogs of the Dow’, this strategy invests in ten high dividend-yielding stocks contained within the ASX 50 index. It is adjusted on an ‘as-needed’ basis, based on a monthly check, to ensure we continue to hold the optimal portfolio.

Latest Update – 01 July 2020

Being the first trading day of the month, we need to re-balance the ASX Blue Chip portfolio. For today, there are three stocks which need to be changed. The stocks to be sold from the portfolio include Sydney Airport (SYD), Qantas Airways (QAN), and Stockland (SGP). These stocks are to replaced with the following; Woodside Petroleum (WPL), BHP Group (BHP), and Medibank Private (MPL).

Regarding the current share purchase plan for Qantas (QAN), we will continue to monitor the share price and provide an update nearer to the closing date, which is the 22nd of July.

We have some members who like to know the next five stocks in the list, these are listed below the main table. As a reminder, this strategy is checked for the need to rebalance on the 1st of each month (or the next business day if the 1st is a non-trading day). The portfolio will only be rebalanced when it drifts sufficiently far from the ‘ideal’ portfolio to reduce trading costs and trading activity in this strategy. As a result, the strategy may suit long term investors who wish to perform minimal portfolio management. For specific details of closed trades, please see our historical performance page.

For specific details of closed trades, please see our closed trades page.

For historical trades updates please click here.

Stock codeStock nameQtyEntry dateEntry priceCurrent priceCurrent valueDividendsDividend yieldReturn percentage
AGL
AGL Energy
2632 Sep 19$18.98$17.47$4,594.61$0.478.71%(5.48%)
BHP
BHP Group
1391 Jul 20$35.82$36.01$5,005.39$0.008.45%0.53%
CBA
Commonwealth Bank of Australia
641 Nov 17$77.79$71.10$4,550.40$10.628.80%5.05%
FMG
Fortescue Metals Group
5001 Apr 20$10.00$14.03$7,015.00$0.0010.28%40.30%
MPL
Medibank Private
1,6721 Jul 20$2.99$3.02$5,049.44$0.007.42%1.00%
NAB
National Australia Bank
1521 Nov 17$32.81$18.90$2,872.80$4.938.81%(27.37%)
RIO
Rio Tinto
591 Apr 20$84.57$97.81$5,770.79$0.009.57%15.66%
SCG
Scentre Group
2,2421 Jun 20$2.23$2.32$5,201.44$0.0010.56%4.04%
VCX
Vicinity Centres
3,1051 Jun 20$1.61$1.50$4,657.50$0.0010.91%(6.83%)
WPL
Woodside Petroleum
2301 Jul 20$21.65$21.77$5,007.10$0.008.98%0.55%

*Quantities are based on investing $5,000 per stock on the entry date

**Dividend yields are gross

Next Five Top Dividend Stocks

Stock CodeGross Yield
ORG7.34%
SGP7.30%
TLS7.29%
QBE6.94%
AZJ6.86%

ASX Blue Chip Strategy

The Blue Chip strategy has been backtested over 22 years and selects ten of the top 50 Australian stocks. This strategy represents a simple, yet robust, diversification option that has continually outperformed the Australian market. We advise that members buy equal proportions of the ten recommended stocks to hold for the long term. From there, optimisation is only needed upon instruction, which occurs on average four times per year (but can be more or less frequent).

How To Follow This Strategy

Rivkin’s strategies are designed to be as easy as possible for investors to follow. To follow the ASX Blue Chip strategy, investors need to buy the securities in the above table in equal weights. Weights can drift over time as prices move, but we only recommend re-balancing security weights if they stray too far from the target weight (10% per security). The volumes shown in this table are based on a $5,000 investment per stock which produces a $50,000 portfolio.

Every now and then, the list of stocks will be updated in what we call a ‘re-balance’. This means investors will need to look at the new list and sell any stocks that are no longer on the list. After these stocks are sold, the new stocks from the current table can be bought.

About The Strategy

The ASX Blue Chip strategy was developed and launched by Rivkin in 2009 and became one of our best performing strategies in the years following launch. The strategy provides investors with a high dividend yield that also includes franking credits in most cases. Please click here to find out more about the strategy.

Rivkin does not ever provide financial advice. Please consider your own circumstances before purchasing any of our products or acting on our general advice, for any Rivkin product or recommendation.

SHOW COMMENTS / QUESTIONS (17)

17
Comments

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David B.

The top 3 companies in the list are shopping mall owners – at least one already has had to resort to a capital raising and their income and therefore their ability to continue to pay any dividend at all in the short to medium future must be at risk. Department stores are closing down numerous outlets and they are often “flagship investors”. Stocks further down the list include QAL bleeding $40 million a month, and almost zero income, and Sydney airports in the same position. I know the “strategy is the strategy”, but I am not brave enough to invest… Read more »

Shannon Rivkin

Hi David, I completely understand your concern but it must be remembered that the strategy wasn’t designed to buy companies performing strongly and paying out large dividends, but beaten-down blue chips which look cheap on a historical dividend basis. The dividends shouldn’t be looked at as necessary to provide a good return, but rather simply provide the guide as to which blue-chip stocks look cheap relative to the current share price. Looking at the shopping centre owners, I think that definition applies very well here. These are property groups which are seeing a massive hit to short-term revenues and which,… Read more »

Peter W.

Re VCX recommendation. It is in a trading halt because of an announcement this morning of a capital placement at 1.48. how does this affect us?

Shannon Rivkin

Hi Peter,
The recommendation is to simply buy VCX when it recommences trading tomorrow.
Regards,
Shannon Rivkin

Wayne L.

This continues… The prices quoted are almost impossible to achieve. Plus, your insistence on using gross dividend yield is misleading. Seeing we all have different circumstances surrounding our tax, wouldn’t a fairer way to quote the return be without grossing them up? The relativity would still be there, but the misleading nature of the numbers would be removed.

Oliver Gordon

Good Morning Wayne, The gross dividend yield is what we use to rank the ASX 50, in order to generate the portfolio. We are not saying that this is the yield that all investors are receiving. By using gross dividends in the ranking, it means the strategy is preferencing those companies that have a higher level of franking. If we were to change this measure to net dividend yield, it would change the ranking, which we do not want to do. In terms of the dividends received, the ‘dividends’ column in the table shows the total net dividend amount. This… Read more »

Wayne L.

Thank you Oliver, for explaining that. But to be absolutely clear, when you say the ‘dividends’ column in the table shows the total net dividend amount, you mean the amount PER SHARE HELD. Right?

Oliver Gordon

Good Morning Wayne,

Yes, you are correct. The column labelled ‘Dividends’ is the net dividends per share that have been paid since the stock was entered into the Blue Chip strategy. The stocks showing zero have yet to pay a dividend since entering the portfolio. The column labelled ‘Dividend Yield’, is calculated using gross dividends, and is the yield as of the 1st of May, when the table was updated. We update this figure each month and it is used just for ranking purposes.

Regards, Oliver

Wayne L.

Great. Thanks for clarifying.

Troy J.

G’day guys

How did you get WPL, FMG, RIO, ORG, SGP, ORG at the entry prices listed on the 1/4?

They were the closing prices for the 31/3…..

Cheers

Troy

Oliver Gordon

Good Afternoon Troy,

Apologies, yes the ‘entry prices’ first entered in the table are the closing prices from the day before. However, these have since been updated to reflect the open price on the 1st of April.

Regards, Oliver

Luke W.

RE 2-Mar update: can you please clarify – you write that “one stock has fallen below the 15th rank” then quote two stocks that need to be traded. Also one of the stocks to be bought (VCX) is also listed in the “Next Five Top Dividend Stocks” list, and it’s not the first in the list.
Call me confused, but please clarify whether we are trading one stock or two and is VCX to be traded or is it third in the next five list?? Thanks.

Anonymous User

Hi Luke, Thanks for the message. To clarify, if one of the holdings drops below a ranking of 15 it results in a portfolio rebalance being triggered. At the time of a rebalance, the new list of companies represents the top 10 ranked by dividend yield. This month a rebalance occurred because Wesfarmers Limited (WES) only paid a dividend of 75 cents and consequently its dividend yield dropped significantly, and it fell below a rank of 15. At the same time Woodside Petroleum (WPL) dropped out of the top 10 and so both names were replaced by BHP Group Limited… Read more »

Luke W.

As at 3 Feb: The date-stamp underneath the “ASX Blue Chip Strategy” title has not been updated from 3 Jan 2020 to 3 Feb 2020. The “tile” for this update is therefore still being sorted by the January date stamp.

Wayne L.

The dividend yields stated here vary vastly from those quoted by other similar organisations I subscribe to. Suncorp at 11.58%, for example. The Rivkin figures do not say “Gross Dividend Yield”, although that’s what I suspect they are. Even so, I couldn’t find any other experts suggesting yields as high as the above for these companies. What’s going on, please?

William O.

Hi Wayne,
You are correct in that the dividend yields are gross. I have added a note below the table to clarify this.
Regards,
William

David K.

Can you please publish the full list of the top 15 dividend stocks?

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