5 bluechip stocks that outshone in 2020

Summary

  • Bluechip stocks are those large companies that possess strong fundamentals and dividend paying capacity.
  • Many bluechip stocks gave stellar returns in 2020 so far despite COVID-19 related concerns.
  • Afterpay and Fortescue were a few bluechip stocks in demand this year.

The bluechip stocks are well-established companies with growing profits and dividend paying capacity. These stocks generally remain in demand among investors owing to their reputation of being fundamentally strong. Here we have compiled a list of 5 bluechip stocks that outshone in 2020 on the basis of market returns despite COVID-19 related concerns. These companies are spread over a range of sectors in the Australian economy.

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  1. Afterpay Ltd (ASX:APT) is a financial technology firm which operates in Australia, US, UK, and New Zealand. In FY20, the company with over A$31 billion market capitalisation, posted 97 per cent increase in total income, taking the total income to A$519.2 million. The gross profit stood at A$384.9 million as against A$204.6 million in last fiscal. In the last quarter, Afterpay had also announced a strategic partnership with Westpac Banking Corporation (ASX:WBC) for opening saving bank accounts for its customers.

On 15 December 2020, the company’s shares price closed at A$110, up by A$0.069 or 0.06 per cent as against the last closing. The year-to-date returns for the stock stood at 259 per cent as on 15 December 2020.

READ MORE: 5 ASX-listed blue chip shares for December 2020

  1. Fortescue Metals Group Ltd (ASX:FMG) is a A$68 billion iron ore miner, operating in Australia. In FY20, the company recorded a revenue of US$12.82 billion, up almost 29 per cent from FY19. It delivered iron ore shipments of 178.2 metric tonnes (mt) for FY20, up 6 per cent on FY19. Net profit after tax surged to US$4.7 billion and underlying EBITDA rose to US$8.4 billion as against the corresponding period of last year. The company reported cash on hand of US$4.9 billion as at 30 June 2020 with net debt of US$0.3 billion. The firm also announced a fully-franked total dividend of A$1.76 per share for its investors in FY20.

On Tuesday (15 December 2020), shares of Fortescue Metals closed at A$21.48, down 3.06 per cent as against the previous close. The YTD return for the stock stands at 99.2 per cent as of 15 December 2020.

  1. Wesfarmers Ltd (ASX:WES) is  a company with more than A$57 billion market capitalisation. The Australian conglomerate, headquartered in Perth, Western Australia, has interests predominantly in Australian and New Zealand retail, chemicals, fertilisers, coal mining and industrial and safety products. The company reported revenue of A$30.8 billion in FY20, up 10.5 per cent from the last fiscal. Net profit after tax was down 16.4 per cent to A$1.6 billion. The company offered a fully franked dividend of A$1.70 per share in FY20.

Source: Wesfarmers’ Annual Report 2020, dated 23 September 2020

The shares of Wesfarmers closed at A$50.97, down 0.05 per cent on 15 December 2020 as against the previous close of A$50.94 on 14 December 2020. YTD return stands at around 23 per cent.

  1. Rio Tinto Limited (ASX:RIO) is a mining company with market capitalisation of over A$42 billion. In the first half of FY20, the company recorded net cash from operating activities of $5.6 billion, down 12 per cent from H1 2019. Rio Tinto’s free cash flow also fell by 28 per cent to $2.8 billion. The company revealed that underlying EBITDA fell 6 per cent to $9.6 billion in H1 2020. Rio Tinto’s board has increased the ordinary dividend per share by 3 per cent to $1.55.

Source: Rio Tinto half year results presentation, dated 29 July 2020

READ MORE: Why blue chips are an obvious choice for long-term investors?

Stock of Rio Tinto closed at A$112.42, down 1.33 per cent as against the last close on 15 December 2020. Rio Tinto shares delivered almost 11 per cent return year-to-date so far.

  1. Commonwealth Bank of Australia (ASX:CBA) is one of the ‘big four’ banks in Australia. The firm has a market capitalisation of over A$148 billion. The bank in its latest update released on 1 December, 2020 said that it has recorded a sharp growth in digital wallet transactions in the last 12 months. The number of monthly transactions surged to 52 million in 2020 from 29 million in October 2019. In the latest update released on Wednesday, 16 December 2020, the bank said it has entered into an agreement with online home loan company Lendi to merge the Australian Home Loans business.

Shares of Commonwealth Bank of Australia closed at A$83.07, down 1.01 per cent on Tuesday (15 December 2020). The stock has posted an almost flat YTD return of 3.9 per cent.


 


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