Five Blue Chips Worth Considering Now

TSC Ratings provides exclusive stock, ETF and mutual fund ratings and commentary based on award-winning, proprietary tools. Its "safety first" approach to investing aims to reduce risk while seeking solid outperformance on a total return basis.

History shows that small companies' shares usually outperform those of large caps during stock-market recoveries.

The Russell 2000 Index, a barometer for small caps, has soared 52% from its March low as the Nasdaq climbed 44%, the S&P 500 Index increased 38% and the Dow Jones Industrial Average advanced 33%. But this recession is different from others, so history may not be such a useful guide. And large companies' stocks have been neglected. The next year may see the biggest companies lead the charge if there are signs the economy may be shakier than expected.

TheStreet.com Ratings' model is increasingly turning bullish, or less bearish, as earnings improve, and technology and financial stocks drive major indexes higher. The model, an objective measure of companies' prospects, rates 12% of 5,000 stocks a "buy," up from 6.5% in late March. Many recent upgrades have been blue-chips companies.

The following stocks offer steady dividends and growth potential. They lack small caps' undiscovered appeal but compensate for their banality with value, income and peace of mind. All are on TheStreet.com Ratings' "buy" list.

Colgate-Palmolive(CL Quote) is one of the world's largest consumer-products makers. (It produces more toothpaste than any other company.) Because people are likely to shave and shower in the foreseeable future, Colgate's revenue is secure. Its first-quarter performance was strong despite the recession. Sales fell 5.6% to $3.5 billion, but earnings per share jumped 13%, extending a growth streak to eight quarters.

With a price-to-earnings ratio of about 19, the stock trades at a premium to peers in the household products industry. And a dividend yield of 2.5% is less than the 3.2% average offered by the S&P 500. But this stock holds up year in and year out.

For risk-averse investors, it's an attractive buy-and-hold stock that offers steady income and growth. The shares have risen just 3% in 2009 but declined only 5% over one year, when the Dow fell 29%.