During the current rally, stocks have risen, plummeted, and risen again, pushing investors toward small-caps, tech, and growth stocks. While profitable, this strategy might not be the best long-term decision if you’re seeking continued growth alongside general stock stability, avoiding the rapid stock price swings we’ve been seeing. Instead, these blue-chip stocks to buy offer a firm foundation of long-term opportunity to anchor your portfolio.
The economic landscape remains uncertain, with inflation stubbornly above the Fed’s 2% target, creating general unease and uncertainty about short-term economic conditions. One adverse event, economic or otherwise, could send speculative stocks tumbling again. With this in mind, these blue-chip stocks to buy offer stability, value, and diversification to protect yourself against the worst fallout if (or when) the market takes another hit.
Altria (MO)
Altria (NYSE:MO) may trade well below pre-pandemic highs, but its hefty dividend yield and current momentum make it a blue-chip investor’s dream. The company’s current dividend yield is an impressive 9.56%, which is particularly enticing as high bond yields make fixed-income investing increasingly central to well-rounded portfolios.
Recent earnings reports show that the company is on solid financial footing, ensuring upside potential while maintaining its substantial dividend distribution. Despite declining smoking rates, Altria’s diluted earnings per share grew by 21% over the quarter.
Simultaneously, Altria is aggressively exploring smokeless alternatives. Adaptation is crucial for any company, but especially for Altria, which relies heavily on tobacco sales. Altria is also getting ahead of regulatory criticism by developing a first-of-its-kind Bluetooth-enabled tool to restrict underage use of smokeless tobacco products. If Altria successfully transitions into the smokeless nicotine market, it could solidify its position as the leading blue-chip stock in the wider industry.
Blue-Chip Stocks to Buy: Medtronic (MDT)
The medical stock sector experienced dramatic fluctuations during the pandemic, leaving many investors wary. Companies saw significant stock surges followed by steep declines, casting a shadow over the entire industry. Medtronic (NYSE:MDT), a major player in the field, wasn’t immune to these trends, with its market capitalization nearly half what it was mid-pandemic. However, recent signs point to a strong recovery, and its 3.5% dividend yield keeps investors content while they wait for the rebound.
Medtronic’s strong dividend program is particularly noteworthy in the current context. The company has a nearly 50-year history of consistently increasing its annual dividend, demonstrating a stable commitment to shareholder returns.
Beyond its financials, Medtronic’s role in the medical device industry is significant. Known for its innovation and development in medical technology, the company is now focusing on more collaborative and risk-based contracting with hospital networks. These agreements aim to enhance patient outcomes and reduce costs, making Medtronic a valuable partner in an era of escalating healthcare delivery costs. Additionally, ongoing partnerships with Nvidia (NASDAQ:NVDA) keep Medtronic at the forefront of emerging health tech trends, solidifying its position as a top blue-chip stock to buy today.
Occidental Petroleum (OXY)
If you’re looking for traditional oil and energy firms to add to your “blue-chip stocks to buy” list, Occidental Petroleum (NYSE:OXY) is a perfect choice. Warren Buffett loves the stock; Buffett’s endorsement is proof enough to sway even the most skeptical investor. However, if you need more of a push to consider this blue-chip stock, recent news may mark massive upside ahead for Occidental Petroleum.
Last year, Occidental Petroleum cemented its position as a sustainability-centric oil stock, as Amazon (NASDAQ:AMZN) announced a new partnership with a subsidiary to leverage emerging carbon capture technology. Analysts anticipate this collaboration could add up to $150 million to Amazon’s revenue by helping the retailer reduce its carbon footprint through a new direct air capture plant.
This facility is one of the first of its kind, made possible by the Bipartisan Infrastructure Law’s $3.5 billion allocation for plant development. This initiative allows OXY to diversify its revenue streams as more corporate entities seek ways to offset their carbon emissions. As demand for sustainability continues to grow, traditional oil and gas companies must adapt. OXY stands out as one of the first blue-chip stocks in the sector to proactively embrace this trend.
OXY’s overall trailing yield is a respectable 2.75%. Warren Buffett’s endorsement of the stock is a positive signal for investors, and the company’s prospects moving forward look equally promising.
Blue-Chip Stocks to Buy: Costco (COST)
Costco (NASDAQ:COST) is one of the few companies with unstoppable momentum amid wider economic conditions. It has grown almost 24% since January and a remarkable 225% over the past five years. Though consumers increasingly manage grocery budgets more tightly, Costco remains top-of-mind for many shoppers today.
The shift in consumer behavior is evident as shoppers have reduced spending on non-essential items while maintaining consistent purchases of essential products at Costco. Though the company’s exceptional growth during the pandemic creates a challenging baseline for ongoing expansion, management seems well-positioned to maintain momentum.
Additionally, Costco still has room to grow and untapped potential globally. Membership is rapidly growing despite the year’s economic turbulence. Management’s sensitivity to consumer and customer needs increases brand loyalty. Although activist investors have called for membership price hikes, the Chief Financial Officer has pointed to inflation and household concerns as reasons to stabilize pricing. Costco’s growth amid uncertainty and strong brand loyalty make it a consumer mainstay. It’s also a perfect blue-chip stock to buy if you want to protect your portfolio.
Jazz Pharmaceuticals (JAZZ)
If you want to capture current cannabis trends but are understandably sketched out by speculative cannabis stocks, Jazz Pharmaceuticals (NASDAQ:JAZZ) is a promising blue-chip alternative. This blue-chip stock offers the stability of a legacy pharmaceutical company with one foot firmly in the medical cannabis sector. Better yet, Jazz is undergirded by a strong foundational series of treatments and medication, with the company’s daytime sleepiness and narcolepsy therapeutic, Xywav, remaining a strong performer that accounts for up to 10% of total sales. These legacy pharma initiatives provide stability as the company explores the emerging medical cannabis market driven by recent rescheduling news.
Jazz is set to explode as markets realize the implications of medical cannabis rescheduling, thanks to its subsidiary GW Pharmaceuticals, one of the first companies to develop and commercialize medical cannabis. This puts Jazz near the top of the national medical cannabis market, unlike many pure-play cannabis stocks focused solely on branding and distribution. By focusing on high-level initiatives, Jazz is poised to dominate the (soon to be) rapidly growing medical cannabis sector to outpace late entrants, including well-established pharmaceutical companies reacting to rescheduling.
Blue-Chip Stocks to Buy: Realty Income (O)
Realty Income (NYSE:O) often tops lists of dividend stocks to own forever, and it’s easy to see why. The company’s status as a dividend aristocrat, its monthly distributions, and a 5.75% yield make it a perennial favorite. After falling nearly 20% over the past year, this dividend stock is attractively priced for long-term investors. Realty Income’s inherent stock strength remains unchanged, making it a compelling buy for those looking to compound their investment.
Realty Income boasts an impressive 98% occupancy rate across its properties, with 80% of retail tenants in sectors resilient to economic downturns. Many of these tenants are in the grocery sector, with convenience stores, dollar stores, and drugstores also making up a substantial part of its portfolio. This creates a robust mix that is immune to all but the most severe economic downturns.
The company’s triple-net lease model transfers all operational risks and expenses, including property maintenance costs, to the tenants. This structure effectively shields Realty Income from the rising material and labor costs often accompanying higher interest rates. Additionally, with leases typically lasting 15 years or more, complete with renewal options, Realty Income enjoys a steady stream of rental income. Realty’s current rent recapture rate is a staggering 104.3% today, creating foundational blue-chip stock stability.
AT&T (T)
When investors think of cheap blue-chip stocks, AT&T (NYSE:T) often tops the list. Despite dipping last summer due to concerns over lead shielding, shares are rebounding as the issue appears less severe than initially thought. Yet, shares remain undervalued, trading well below pre-pandemic highs, presenting an opportunity to benefit from a potential rise back to the top.
While blue-chip stocks, particularly in the utilities sector, often lack the innovation seen in growth stocks, AT&T stands out. This week, the company made headlines by announcing a commercial partnership with AST SpaceMobile (NASDAQ:ASTS) to provide space-based broadband cell connectivity to customers through 2030. Although the companies have collaborated since 2018 to bring this vision to life, this move marks a significant milestone in AT&T’s goal to expand its global network by leveraging next-gen space technology.
Another key feature of Wall Street’s favorite blue-chip stocks is their dividend yield, and AT&T is a longstanding favorite among income investors. With a current dividend yield of 6.55% and a 56% payout ratio, AT&T offers income, stability, and newfound growth opportunities through its strategic partnership with AST SpaceMobile.
On the date of publication, Jeremy Flint held no positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Jeremy Flint, an MBA graduate and skilled finance writer, excels in content strategy for wealth managers and investment funds. Passionate about simplifying complex market concepts, he focuses on fixed-income investing, alternative investments, economic analysis, and the oil, gas, and utilities sectors. Jeremy’s work can also be found at www.jeremyflint.work.