In addition, we have to remember that September is traditionally Dick’s best sales month of the year. That’s why they can make excellent investments for the long-run. And their strength and reliability make them compelling investments for investors of all experience levels, from beginners to experts. Washington Federal, Inc. is the parent company of Washington Federal, a national bank that runs more than 200 offices across eight states, primarily in the West of the United States. Key states include Washington, Oregon, and Arizona, which account for nearly 80% of loans. Profits are derived mostly from interest sources, as non-interest income makes up only about 9% of net revenue.
Familiarity with a company makes stock buying more comfortable, and it’s exciting to become a partial owner of a business you know. Blue chip stocks are the cornerstone of buy-and-hold portfolios. For those investors blue chip stocks can be a viable alternative. Having a few of these stocks in your portfolio, even if they occupy a very small percentage, can help offset the gut-churning volatility that can affect every investor’s actual risk tolerance.
Buying blue chip stocks can offer the opportunity for capital gains that may, in many cases, outpace the rate of inflation which is a concern with fixed-income investments. And since many blue chip stocks pay dividends and rising dividends at that, investors have another avenue for collecting income from these high-quality stocks. Every now and then, I find it worth taking a big step back and looking at the “big picture” of where the best investment opportunities are around the world. These 10 stocks can serve as a “starter” international portfolio for investors who believe owning a few good companies you know is better than owning hundreds or thousands of companies you don’t know.
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Apple’s market capitalization climbed above the $1 trillion mark in 2018, up to an unprecedented $2 trillion in 2020, and on Jan. 3, 2022, it once again made history by briefly climbing above the $3 trillion mark. This pricing power has led to strong cash flow, with shareholders benefitting through consistent dividends. The bank has a strong management team and a consistent track record of dividend payouts. While there is no precise definition of what makes a blue chip stock, a blue chip stock tends to be a stock of a company that is large, financially sound and has an excellent reputation. Non-US markets cover 75% of the world’s economy, 90% of IMF expected GDP growth, and 95% of the world population.
Coca-Cola financials are impressive, with a return on equity of 43.06%, meaning it’s using shareholder capital efficiently. It has a track record for consistently paying out dividends, with an annual dividend yield of 3.05% that’s been increasing consistently over time. Coca-Cola’s strong balance sheet, with a good debt-to-equity ratio and liquidity ratios, makes an appealing investment option even when economic times turn uncertain. Investing in blue chip companies that pay dividends can significantly increase your wealth over time.
While investors might use different criteria to compile a list of blue chip stocks, the main qualifier is elite durability. That’s a trait fewer than 50 companies typically possess, making blue chip stocks a select group that most companies strive to join one day. There’s no official blue chip stocks list, but the Dow Jones Industrial Average, which lists 30 prominent companies, is a good place to start. These companies are often regarded as some of the country’s most valuable and reliable heavyweights.However, many others listed on the New York Stock Exchange or the NASDAQ would also qualify as blue chips.
As noted above, blue-chip stocks are generally, but not always, household names. Note that this list does not include every blue-chip stock; it is just intended to be a sample. Our partners cannot pay us to guarantee favorable reviews of their products or services.
The trend reversed in 2022, as the company faced cost inflation and negative currency trends. Even so, PG continues to produce lots of cash–enough to fund $8.8 billion in dividends and $10 billion in share repurchases in fiscal year 2022. Blue-chip stocks aren’t as volatile as smaller, younger companies. They typically manage downturns with a been-there, done-that pragmatism. Many have been operating for decades and have powered through all types of financial market and economic crises. They have highly experienced and disciplined leaders who know what levers they can pull to address changing conditions.
Its only published guideline is that the DJIA represents the top 30 stocks across all sectors except transportation and utilities—with a focus on reputation, track record of growth and trading volume. With a market cap of more than $2.7 trillion, Apple is the largest public company in the world. Climbing to this valuation has brought investors lucrative gains. The company has the best annualized return over the past decade of any stock on this list. And speaking of ETFs, another benefit of blue chip stocks is that investors can find an ETF that specializes in blue chip stocks. This is a great option for investors who don’t want to purchase individual stocks or simply want a more set it and forget it option for this percentage of their portfolio.
J&J is splitting into two companies by November 2023, and this is worth watching. One company will focus on consumer health products, considered the weaker segment of J&J’s business. The other will contain its highly regarded pharmaceuticals and medical devices segment. Coca-Cola (KO -0.98%) has been a leader in the beverage industry for more than a century, as its namesake soft drink spawned a global empire.
Why are blue chip stocks popular among investors?
The 7 best blue chip stocks as ranked using data from the Sure Analysis Research Database (excluding REITs and MLPs) are analyzed in detail below. These are the largest firms by market capitalization on Morningstar’s Best Companies to Own list whose stocks are at least 10% undervalued as of June 2, 2023. Management’s target is to return half of the previous year’s free cash flow to shareholders via its dividend, which has equated to fantastic income increases trading diary for owners of this tech stock. Payment processing giant Mastercard is a blue chip company in the digital payments space. As one of the most recognizable global names in electronic payments, Mastercard has competitive advantages that enable it to maintain its dominant marketplace position. It partners with banks and other lenders that want to issue cards to their customers and simply collects a small fee every time a transaction is processed using its network.
- ExxonMobil has strong liquidity levels, with current ratio at 1.06, meaning the company has no trouble meeting its short-term financial obligations.
- Blue chip stocks are a way for growth investors to add a value component.
- Blue chip stocks are the titans of their sectors—industry-defining companies that are well-known, well-capitalized, long-term stable plays with solid financial prospects.
- UnitedHealth Group is one of the largest private health insurers, providing medical benefits to 50 million members globally, including 5 million outside the U.S. at the end of 2021.
- After all, if we’re really headed for further declines, it’s better to hold highly stable, profitable stocks – especially if they also carry dividends.
You can buy blue chip stocks as individual stocks or through funds that contain tens or hundreds of stocks. Investing in individual shares of blue chip stocks comes with greater risk than investing in diversified mutual funds and exchange-traded funds (ETFs). These high-growth upstarts aim to be the blue chip stocks of tomorrow.
One factor I have named as making most of these 10 names attractive is a strong dollar, and UL does this with the most global diversification (covering all 10 markets listed above and many more). On top of that 3% yield, the dividend is currently expected to grow from $1.60 to $1.81 over the next two years, a growth rate of 6% per year, which on top of the 3% yield indicates a 9% expected rate of return. Stable and reliable, having a blue chip stock in your portfolio is never a bad thing. This stability points to strong financial footing, meaning no debt and a lot of efficiency. Blue chip stocks are often protected from severe volatility, making the risks quite limited. Although investing in a blue chip stock brings steady, long-term returns — they are well regulated and have potential for regular dividends — there are some cautions to keep in mind.
Johnson & Johnson
The second bank on our list of the best blue-chip stocks to buy, Wells Fargo has taken it on the chin as the banking crisis has unfolded. But Wells Fargo isn’t a regional bank; in fact, it remains one of the top deposit gatherers in the U.S. The bank beat first-quarter estimates, and deposits slipped modestly. However, the bank is in the midst of a multiyear rebuild, with years of expense-saving-related projects ahead and additional investment in its existing franchises, says Morningstar strategist Eric Compton. The bank also has a sizable presence in the middle-market commercial space and boasts a large advisor network, which support its wide economic moat rating.
- UBS said it is already seeing benefits from the integration of Credit Suisse’s large wealth management business.
- Apple’s powerful brand makes it the most lucrative consumer electronics provider and one of the most reliable companies to own for the long term.
- The company wears the blue-chip title with ease, as it traces its roots back to 1885, producing a predecessor to the modern thermostat, explains Morningstar senior analyst Josh Aguilar.
- That’s why they can be an excellent addition to a portfolio (depending on your investment goals and style).
- Lincoln National Corporation offers life insurance, annuities, retirement plan services and group protection.
Apart from last year’s record second quarter results, Exxon Mobil posted its strongest earnings for the April through June period in more than a decade this year, helped by aggressive cost cutting. The company said it achieved structural cost savings of $8.3 billion from 2019 levels, nearing its target of $9 billion in total cost cuts. The company also distributed $8 billion in cash to shareholders in Q2 of this year, including $3.7 billion of dividend payments. While dividend payments are not absolutely necessary for a stock to be considered a blue chip, most blue chips have long records of paying stable or growing dividends.
Dallas-based Texas Instruments generates over 95% of its revenue from semiconductors and the remainder from its well-known calculators. Texas Instruments is the world’s largest maker of analog chips, which are used to process real-world signals such as sound and power. Texas Instruments also has a leading market share position in processors and microcontrollers used in a wide variety of electronics applications. UnitedHealth Group is one of the largest private health insurers, providing medical benefits to 50 million members globally, including 5 million outside the U.S. at the end of 2021. As a leader in employer-sponsored, self-directed, and government-backed insurance plans, UnitedHealth has obtained massive scale in managed care. Johnson & Johnson is among the largest pharmaceutical firms in the U.S. with a $387 billion market cap and over 132,000 employees.
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All three major U.S. indices declined in August, with the Dow Jones Industrial Average falling 2.4%, the Nasdaq losing 2.2%, and the benchmark S&P 500 sliding 1.7%. Even September is off to a rocky start, which is sending many investors into safer blue-chip stocks to buy. After all, if we’re really headed for further declines, it’s better to hold highly stable, profitable stocks – especially if they also carry dividends. While blue chip companies are reliable, that also comes with slower growth. This makes them a conservative option for investors looking for a safe bet for their already established portfolio. You can also begin to establish your portfolio using these same assets, especially if you have enough money to invest in something that’s a bit more expensive.
Fiscal year 2023 adjusted earnings per share rose to $6.46 from $5.48 in the prior year. They can face serious business disruptions, as Boeing and Disney have in recent years. Fortunately, they have access to capital, financial strength and experienced leadership on their side. These resources allow them to work through disruptions more effectively than a smaller company could.
What Is a Blue Chip Stock?
Although the stock market constantly gains and loses value, these stocks often exhibit below-average volatility while delivering market-beating returns over long time horizons. Blue chip dividend-paying stocks are strong additions to portfolios of all kinds, especially for investors seeking stability and income. Blue-chip stocks offer stability, safety and dividends through companies with well-entrenched businesses that have proven they can stand the test of time (and pay dividends while doing it). Blue-chip stocks also tend to be substantial businesses, large or mega caps, with deep moats related to their brands, product(s) or industries. They offer an element of safety and income for investors in the long haul.
We’d like to share more about how we work and what drives our day-to-day business. Morningstar Investor’s stock ratings, analysis, and insights are all backed by our transparent, meticulous methodology. Broadcom isn’t exactly a household name among semiconductor companies, but the company designs parts for a wide range of items from smartphones to mobile network equipment to data center hardware.
What are blue chip stocks?
They don’t offer the meteoric growth of a hot startup or today’s most popular cryptocurrency, but instead give your portfolio steady returns over periods of time measured in decades. Like their poker namesake, blue chip stocks might just be the best investments in the game. Long-term investors own blue chip stocks because of their wide moats, dependable dividends and steady earnings. They can lend a stock portfolio ballast during periods of market turbulence.
The markets that use the company’s products include those in the appliances, electronics, beverage, construction and food industries. The Morningstar fair value estimate represents what Morningstar analysts think a particular stock is worth. Fair value estimates are rooted in the fundamentals and based on how much cash we think a company can generate in the future, not on fleeting metrics such as recent earnings or current stock price momentum. Learn more about how Morningstar values stocks in Morningstar’s Guide to Stock Investing. Apple investors have enjoyed immense returns during the past two decades as the company has risen to become one of the biggest and most profitable in the world. Apple’s powerful brand makes it the most lucrative consumer electronics provider and one of the most reliable companies to own for the long term.
In the stock market, blue-chip companies are the largest, most valuable and most desirable stocks available on the stock market. Investing in blue-chip stocks is a great way to build a portfolio. However, not all blue-chip stocks are suitable for all investors at all times. Build a watchlist of blue-chip stocks first, then pick the right ones and buy them when they present the best opportunities. Over time, you can build a large portfolio of dividend-paying blue-chip stocks to sustain a comfortable retirement.
Apple (AAPL -1.71%) is one of the most profitable companies in the world. It has pioneered advancements in the technology sector throughout its history. To learn more about our rating and review methodology and editorial process, check out our guide on how Forbes Advisor rates investing products. From a valuation perspective, GS’s forward P/E ratio is currently toward the top of its range. The stock currently trades at its lowest P/E ratio since 2019, while its forward P/E ratio is even cheaper. NKE’s P/E ratio is comfortably below its 5-year average of 46.7, and increased earnings forecasts mean the forward P/E ratio is lower again.
Growth in Comcast’s cable business has slowed, and we expect it to continue to slow as more customers access fiber and wireless network alternatives. We nevertheless think Comcast will be able to limit broadband share losses in the coming years while enjoying solid pricing power, says Morningstar director Mike Hodel. NBCUniversal is more challenged, however, though we like the idea of expanding the theme park business https://bigbostrade.com/ around key content franchises, he adds. A solid balance sheet has allowed Comcast to aggressively repurchase shares and pay decent dividends. To that end, the company has been “a serial acquirer,” notes Morozov, and is skilled at quickly integrating its acquisitions to extract meaningful synergies. The bank announced decent first-quarter earnings, with its deposit base and funding costs coming in as expected.