Last week, Fitch downgraded the U.S. debt rating from AAA to AA+. This came after Fitch had placed the rating on negative watch back in May due to fiscal decline and concerns surrounding the debt burden of the U.S. government. U.S. Treasury Secretary Janet Yellen, who argued that the decisions were based on outdated data. She defended the country’s economic policies and the budget’s potential to reduce the deficit by more than $2 trillion.


We believe that blue chip stocks can show outperformance in the long term. Despite the cuts, companies within the S&P 500 with the highest AAA rating have surged in lower double digits in the last two quarters. Their earnings were above market expectations in terms of both revenue and earnings per share. Their impressive performance extends over longer timeframes as well. With a remarkable 50% and above growth over the last five years and in a massive triple digit percentage surge over the past decade. Their earnings not only surpassed market expectations but also demonstrated robust performance in terms of revenue and earnings per share. Regarding dividends, proudly boasting a healthy annual dividend yield of +0.80%.


Companies namely Apple, Alphabet, Google, Microsoft, Amazon,  Berkshire Hathaway, Walmart, Johnson & Johnson, Nvidia, Tesla,Rivian Automotive to name a few have high dividend yield and a healthy payout ratio . Their commitment to providing returns to shareholders is noteworthy. Their development or investments in AI, infrastructure, essential commodities and essential consumption shows promising potential that signals a positive outlook moving forward.


AAA-rated stocks in the S&P 500 may not remain in continuous upward momentum but surely look poised for long-term outperformance. We believe that these stocks should beat the S&P 500 on its downside.


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