In this article, we discuss the 15 best blue-chip stocks to invest in. If you want to skip our detailed analysis of these companies, go directly to the 5 Best Blue Chip Stocks to Invest In.
Many investors consider buying blue-chip stocks to be the safest equity investment in the face of rising inflation, due to their track records and performance history. Investors also tend to rotate away from growth into value stocks amid rising inflation conditions, according to Sherifa Issifu, an index investment strategy associate at the S&P Dow Jones Indices.
Blue-chip stocks have remained resilient as the market recovers from the pandemic-led crash. In times of rising inflation, value stocks outperform growth stocks. Over the last twelve months, the S&P 500 Value index has returned 33.75%. The broader gain in value stocks outperformed the total return of 31.38% for the S&P 500 index as a whole and 30.22% for the S&P 500 Growth index, in the last twelve months. Two of the largest blue-chip stocks in the SPDR Portfolio S&P 500 Value ETF (SPYV) namely Berkshire Hathaway Inc. (NYSE: BRK-B) and JPMorgan Chase & Co. (NYSE: JPM) have returned 21% and 25% year to date, respectively.
Blue-chip stocks are popular among investors because they have established a solid reputation in the market. These larger companies provide a consistent rate of return and are less volatile than other stocks. Some examples of blue-chip stocks popular among investors are Bank of America Corporation (NYSE: BAC), The Walt Disney Company (NYSE: DIS), Exxon Mobil Corporation (NYSE: XOM), and Johnson & Johnson (NYSE: JNJ), among others.
Blue-chip stocks that pay dividends are also extremely popular among income investors. Some notable examples in this category are credit card processor Visa Inc. (NYSE: V) — which has increased its dividend in the last 12 years — and The Coca-Cola Company (NYSE: KO), which has upped its dividend consistently for the last 59 years.
Our Methodology
The blue-chip stocks on our list are selected from the SPDR Portfolio S&P 500 Value ETF (SPYV), which has returned 18% to investors, year to date.
We also considered the fundamentals and prospects for the growth of these stocks based on key business characteristics. We also looked at analyst ratings to give potential investors more information so they could make better investment decisions.
We also gave preference to the blue-chip companies that pay dividends.
Data from the 873 hedge funds tracked by Insider Monkey were also used to gauge hedge fund sentiment around each stock. With this context in mind, here is our list of the 15 best blue-chip stocks to invest in.
Why pay attention to hedge fund sentiment while choosing stocks?
Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 86 percentage points since March 2017. Between March 2017 and July 2021 our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the SPY. Our stock picks outperformed the market by 86 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
Best Blue Chip Stocks to Invest In
15. Philip Morris International Inc. (NYSE: PM)
Number of Hedge Fund Holders: 46
We start our list of the 15 best blue-chip stocks to invest in with tobacco manufacturer Philip Morris International Inc. (NYSE: PM). The company was founded in 1987 in New York and sells nicotine-containing products as well as smokeless and electric cigarettes internationally.
Philip Morris International Inc. (NYSE: PM) has been on an acquisition binge in recent months as part of the cigarette company’s effort to generate $1 billion in net revenue from Beyond Nicotine products by 2025. In July, Philip Morris International Inc. (NYSE: PM) acquired a Danish pharmaceutical firm Fertin Pharma for $820 million. The company manufactures gums, pills, and other oral and intra-oral treatments. In the same month, Philip Morris International Inc. (NYSE: PM) also announced its plans to acquire British inhaler manufacturer Vectura Group plc (OTC: VEGPF) for $1.45 billion. On August 9, Philip Morris International Inc. (NYSE: PM) acquired a California-based medical inhaler company OtiTopic.
On August 19, Deutsche Bank analyst Gerry Gallagher maintained a Buy rating on Philip Morris International Inc. (NYSE: PM) and increased its price target to $120 per share from the previous $114. Shares of Philip Morris International Inc. (NYSE: PM) climbed 23.32%, year to date.
The company has a market cap of $159 billion. In the second quarter of 2021, Philip Morris International Inc. (NYSE: PM) reported an EPS of $1.57, beating estimates by $0.02. The company’s second-quarter revenue came in at $7.59 billion, an increase of 14.2% year over year.
Philip Morris International Inc. (NYSE: PM) currently pays its shareholders an annualized dividend of $4.80 per share and offers a dividend yield of 4.70%.
At the end of the second quarter of 2021, 46 hedge funds in the database of Insider Monkey held stakes worth $5.97 billion in Philip Morris International Inc. (NYSE: PM).
In its Q2 2021 investor letter, Broyhill Asset Management mentioned Philip Morris International Inc. (NYSE: PM) and discussed its stance on the firm. Here is what the fund said:
“Philip Morris (PM) shook off the prospects of a ban on menthol and a potential cap on nicotine and gained 23%. We shared our thoughts on these regulations during the quarter, which are available here.
‘PM Valuation. PM is up ~ 15% YTD and would have the most to gain under a nicotine cap. A cap would likely accelerate conversion to iQOS, which is 100% incremental for PM (PM also has zero exposure to combustible cigarettes in the U.S. and licenses its IQOS product for MO to distribute domestically). As such, the decline in PM was much more muted, with the stock hitting new 52 week highs a day after the Biden headline, driven by yesterday’s earnings release. It didn’t take long for investors to shift their attention back to fundamentals and the fundamentals here are best in class. In short, results beat estimates across the board (a recurring theme here), and management raised guidance for the full year (another recurring theme). IQOS continued to deliver impressive growth, recording continued market share gains on the heels of continued user acquisition growth, up 1.5M to 19.1M total users. Importantly, IQOS now represents nearly 30% of PM net revenues (management expects “smoke-free” products to represent more than half of their business by 2025, which should make the ESG folks happy), which is driving top-line growth and margin expansion. Hard to believe that they have created a product with higher margins than combustible cigarettes!! We expect PM operating margins to increase by 100bps – 200bps annually as IQOS continues to gain share. The stock trades at ~ 15x today or 2/3 of the market’s multiple for a business likely to generate $35B in cash flow – or 25% of the market cap – in just the next three years. Over the last decade, shares have traded at an average multiple of 18x and within a range of ~ 14x – 22x (+/-1 standard deviation). The stock yields 5.1% at the current price, and we expect management to resume share purchases in the back half of this year.’”
14. Honeywell International Inc. (NASDAQ: HON)
Number of Hedge Fund Holders: 57
Honeywell International Inc. (NASDAQ: HON) is an aerospace and automotive products manufacturer based in North Carolina that ranks 14th on the list of 15 best blue-chip stocks to invest in. Honeywell International Inc. (NASDAQ: HON) offers aerospace products and systems and enterprise software.
On July 26, Deutsche Bank analyst Nicole DeBlase maintained a Buy rating on Honeywell International Inc. (NASDAQ: HON) and increased the stock’s price target to $251 per share from the previous $245, following the company’s strong Q2 earnings.
The company has a market cap of $159.6 billion. In the second quarter of 2021, Honeywell International Inc. (NASDAQ: HON) reported an EPS of $2.02, beating estimates by $0.07. The company’s second-quarter revenue came in at $8.8 billion, an increase of 18% year over year, and beat revenue estimates by $146.48 million. Honeywell International Inc. (NASDAQ: HON) increased its full-year revenue guidance from $34 billion to 34.8 to $34.6 billion to $35.2 billion, previously.
Honeywell International Inc. (NASDAQ: HON) currently pays its shareholders an annualized dividend of $3.72 per share and offers a dividend yield of 1.61%.
At the end of the second quarter of 2021, 57 hedge funds in the database of Insider Monkey held stakes worth $1.83 billion in Honeywell International Inc. (NASDAQ: HON), up from 56 in the preceding quarter worth $1.73 billion.
Just like Visa Inc. (NYSE: V), The Coca-Cola Company (NYSE: KO), Berkshire Hathaway Inc. (NYSE: BRK-B), JPMorgan Chase & Co. (NYSE: JPM), and Exxon Mobil Corporation (NYSE: XOM), Honeywell International Inc. (NASDAQ: HON) is a good stock to invest in, according to market analysts.
13. The Coca-Cola Company (NYSE: KO)
Number of Hedge Fund Holders: 62
The Coca-Cola Company (NYSE: KO) is an Atlanta-based beverage producer and it ranks 13th on the list of 15 best blue-chip stocks to invest in. The Coca-Cola Company (NYSE: KO) sells soft drinks, coffee, water, tea, and energy drinks globally.
On July 22, Truist analyst Bill Chappell kept a Buy rating on The Coca-Cola Company (NYSE: KO) and increased its price target to $65 per share from the previous 60, citing the beverage company’s leading position in the non-alcoholic ready-to-drink market.
The Coca-Cola Company (NYSE: KO) released its first non-fungible token (NFT) collectible on July 28, and an online auction yielded a winning bid of $575,883.61. Shares of The Coca-Cola Company (NYSE: KO) have increased 12.4% in the past twelve months.
The company has a market cap of $240 billion. In the second quarter of 2021, The Coca-Cola Company (NYSE: KO) reported an EPS of $0.68, beating estimates by $0.12. The company’s second-quarter revenue came in at $10.13 billion, an increase of 42% year over year, and beat revenue estimates by $823.11 million.
The Coca-Cola Company (NYSE: KO) currently pays its shareholders an annualized dividend of $1.68 per share and offers a dividend yield of 3.02%. The Coca-Cola Company (NYSE: KO) has increased its dividend for the last 59 years, making the beverage giant a dividend aristocrat and a dividend king, having increased dividend payout for the last 25 and 50 years, respectively.
At the end of the second quarter of 2021, 62 hedge funds in the database of Insider Monkey held stakes worth $25 billion in The Coca-Cola Company (NYSE: KO), up from 61 in the preceding quarter worth $24.9 billion.
12. Pfizer Inc. (NYSE: PFE)
Number of Hedge Fund Holders: 67
Pfizer Inc. (NYSE: PFE) is a New York-based biopharmaceutical company that ranks 12th on the list of 15 best blue-chip stocks to invest in.
On August 23, Pfizer Inc. (NYSE: PFE) announced the $2.26 billion acquisition of Trillium Therapeutics Inc. (NASDAQ: TRIL), a Canadian clinical-stage immuno-oncology firm.
Shares of On Pfizer Inc. (NYSE: PFE) have jumped 20.32% in the past three months. On August 25, Pfizer Inc. (NYSE: PFE) and BioNTech SE (NASDAQ: BNTX) submitted a supplemental biologics license application to the FDA for its COVID-19 booster shot.
On August 18, Cantor Fitzgerald analyst Louise Chen maintained an Overweight rating on Pfizer Inc. (NYSE: PFE) and increased her price target to $61 per share from $53 previously, highlighting the success of the company’s pipeline products.
The company has a market cap of $261 billion. In the second quarter of 2021, Pfizer Inc. (NYSE: PFE) reported an EPS of $1.07, beating estimates by $0.09. The company’s second-quarter revenue grew 92% year over year to $19 billion and beat revenue estimates by $249.96 million. Pfizer Inc. (NYSE: PFE) raised its full-year revenue guidance to $78 billion to $80 billion, up from the previous guidance of $70.5 billion to $72.5 billion
Pfizer Inc. (NYSE: PFE) currently pays its shareholders an annualized dividend of $1.56 per share and offers a dividend yield of 3.39%.
At the end of the second quarter of 2021, 67 hedge funds in the database of Insider Monkey held stakes worth $2.36 billion in Pfizer Inc. (NYSE: PFE), up from 65 in the preceding quarter worth $2.01 billion.
11. Exxon Mobil Corporation (NYSE: XOM)
Number of Hedge Fund Holders: 68
Oil behemoth Exxon Mobil Corporation (NYSE: XOM) ranks 11th on the list of 15 best blue-chip stocks to invest in. Exxon Mobil Corporation (NYSE: XOM) operates as an exploration and production company for oil, natural gas, and other petrochemical products.
On August 6, DZ Bank analyst Werner Eisenmann gave Exxon Mobil Corporation (NYSE: XOM) a Hold rating with a price target of $62.50 per share. Shares of Exxon Mobil Corporation (NYSE: XOM) climbed 6% in the past five days.
The company has a market cap of $236 billion. In the second quarter of 2021, Exxon Mobil Corporation (NYSE: XOM) reported an EPS of $1.10, beating estimates by $0.11. The company’s second-quarter revenue grew 107.77% year over year to $67.74 billion and beat revenue estimates by $3.02 billion.
Exxon Mobil Corporation (NYSE: XOM) currently pays its shareholders an annualized dividend of $3.48 per share and offers a dividend yield of 6.36%.
At the end of the second quarter of 2021, 68 hedge funds in the database of Insider Monkey held stakes worth $3.69 billion in Exxon Mobil Corporation (NYSE: XOM), up from 65 in the preceding quarter worth $2.77 billion.
10. The Procter & Gamble Company (NYSE: PG)
Number of Hedge Fund Holders: 68
The Procter & Gamble Company (NYSE: PG) offers consumer packaged goods internationally and it ranks 10th on the list of 15 best blue-chip stocks to invest in. Among The Procter & Gamble Company’s (NYSE: PG) major brands are Tide, Downy, Pampers, Olay, Oral-B, Neurobion, and Mr. Clean.
The Procter & Gamble Company (NYSE: PG) was upgraded to Buy from Hold on August 20 by Erste Group analyst Stephan Lingnau, who set a price target of $145 per share.
The company has a market cap of $345 billion. In the second quarter of 2021, The Procter & Gamble Company (NYSE: PG) reported an EPS of $1.13, beating estimates by $0.04. The company’s fourth-quarter revenue grew 7% year over year to $18.95 billion and beat revenue estimates by $569.63 million.
The Procter & Gamble Company (NYSE: PG) currently pays its shareholders an annualized dividend of $3.48 per share and offers a dividend yield of 2.44%.
At the end of the second quarter of 2021, 68 hedge funds in the database of Insider Monkey held stakes worth $6.93 billion in The Procter & Gamble Company (NYSE: PG).
9. Medtronic plc (NYSE: MDT)
Number of Hedge Fund Holders: 68
Medtronic plc (NYSE: MDT) is a medical device company based in Dublin that ranks 9th on the list of 15 best blue-chip stocks to invest in. Medtronic plc (NYSE: MDT) manufactures and sells cardiac pacemakers, continuous glucose monitoring systems, surgical products, and robot-assisted surgical machines.
On August 6, Medtronic plc (NYSE: MDT) announced its $1.1 billion acquisition of Intersect ENT, Inc. (NASDAQ: XENT), a California-based ear, nose, and throat medical technology company that manufactures sinus implants. Shares of Medtronic plc (NYSE: MDT) climbed 2% in the previous month.
On August 27, Argus Research analyst David Toung maintained a Buy rating on Medtronic plc (NYSE: MDT) and increased his price target to $165 per share from $150 previously after the company announced strong Q1 results. The analyst shared positive sentiments about Medtronic plc’s (NYSE: MDT) market share in minimally invasive surgeries, pain therapeutics, and the diabetes units.
The company has a market cap of $179 billion. In the first quarter of the fiscal year 2022, Medtronic plc (NYSE: MDT) reported an EPS of $1.41, beating estimates by $0.09. The company’s revenue in the first quarter came in at $8 billion, an increase of 23% year over year, and beat revenue estimates by $107.73 million. The revenue growth in the quarter was driven by the medical surgical and cardiovascular products sales which grew 29% and 19%, respectively.
Medtronic plc (NYSE: MDT) currently pays its shareholders an annualized dividend of $2.52 per share and offers a dividend yield of 1.88%.
At the end of the second quarter of 2021, 68 hedge funds in the database of Insider Monkey held stakes worth $3.39 billion in Medtronic plc (NYSE: MDT), up from 65 in the preceding quarter worth $3.62 billion.
8. Comcast Corporation (NASDAQ: CMCSA)
Number of Hedge Fund Holders: 84
Telecom giant Comcast Corporation (NASDAQ: CMCSA) ranks 8th on the list of 15 best blue-chip stocks to invest in. Comcast Corporation (NASDAQ: CMCSA) offers cable, internet, and phone services. The Philadelphia-based entertainment company owns and operates various film and animation brands including DreamWorks Animation, Universal Pictures, Focus Features, and Illumination. Comcast Corporation (NASDAQ: CMCSA) also manages the Universal theme parks in the US and Japan.
On July 30, Truist analyst Greg Miller maintained a Buy rating on Comcast Corporation (NASDAQ: CMCSA) and increased his price target to $70 per share from $65 previously, citing the company’s strong Q2 earnings result. Greg Miller emphasized the quarter’s revenue growth, which was driven by the Sky and NBCUniversal segments. The Sky segment’s revenue increased by 28% year over year to $5.2 billion, while NBCUniversal’s revenue increased by 39.2% to $7.95 billion.
Shares of Comcast Corporation (NASDAQ: CMCSA) jumped 0.2% on August 25 after the telecom company announced its acquisition of a Texas-based network and cloud provider, Masergy Communications.
The company has a market cap of $274 billion. In the second quarter of 2021, Comcast Corporation (NASDAQ: CMCSA) reported an EPS of $0.84, beating estimates by $0.17. The company’s revenue in the second quarter grew 20.4% to $28.55 billion and beat revenue estimates by $1.37 billion.
Comcast Corporation (NASDAQ: CMCSA) currently pays its shareholders an annualized dividend of $1.00 per share and offers a dividend yield of 1.68%.
At the end of the second quarter of 2021, 84 hedge funds in the database of Insider Monkey held stakes worth $9.30 billion in Comcast Corporation (NASDAQ: CMCSA).
Just like Visa Inc. (NYSE: V), The Coca-Cola Company (NYSE: KO), Berkshire Hathaway Inc. (NYSE: BRK-B), JPMorgan Chase & Co. (NYSE: JPM), and Exxon Mobil Corporation (NYSE: XOM), Comcast Corporation (NASDAQ: CMCSA) is a good stock to invest in, according to market analysts.
7. Bank of America Corporation (NYSE: BAC)
Number of Hedge Fund Holders: 87
Bank of America Corporation (NYSE: BAC) ranks 7th on the list of 15 best blue-chip stocks to invest in. The North Carolina-based consumer bank offers financial services to clients globally.
In July, RBC Capital analyst Gerard Cassidy kept a Buy rating on Bank of America Corporation (NYSE: BAC), with a price target of $44 per share.
The company has a market cap of $350 billion. In the second quarter of 2021, Bank of America Corporation (NYSE: BAC) reported an EPS of $1.03, beating estimates by $0.27. The company’s revenue in the second quarter came in at $21.5 billion.
Bank of America Corporation (NYSE: BAC) currently pays its shareholders an annualized dividend of $0.84 per share and offers a dividend yield of 2.02%.
At the end of the second quarter of 2021, 87 hedge funds in the database of Insider Monkey held stakes worth $46.5 billion in Bank of America Corporation (NYSE: BAC).
In its Q1 2021 investor letter, ClearBridge Investments mentioned Bank of America Corporation (NYSE: BAC) and shared their insights on the company. Here is what the fund said:
“Higher long-term interest rates supported financials such as Bank of America, which has shown both defensive and offensive characteristics in the past year. We believe it continues to be the least risky large bank from a credit standpoint, with conservative underwriting and controlled risk-taking, a leading consumer deposit franchise, scale, and technology. It is also a leader in its commitments to sustainability, or as it terms it, responsible growth. Disclosure and reporting at all levels form a large part of this commitment, including gender diversity and equality, environmental commitments, and support of communities in which it operates. In the first quarter, Bank of America announced it is setting a goal of net-zero greenhouse gas (GHG) emissions in its supply chain and operations, and notably also in its financing activities, before 2050.”
6. Johnson & Johnson (NYSE: JNJ)
Number of Hedge Fund Holders: 88
Johnson & Johnson (NYSE: JNJ) is a manufacturer of consumer health products, medical devices, and branded pharmaceutical products. The New Jersey-based drug manufacturer ranks 6th on the list of 15 best blue-chip stocks to invest in.
On August 20, Morgan Stanley analyst Matthew Harrison maintained an Overweight rating on Johnson & Johnson (NYSE: JNJ), with a price target of $187 per share.
The company has a market cap of $457 billion. In the second quarter of 2021, Johnson & Johnson (NYSE: JNJ) reported an EPS of $2.48, beating estimates by $0.20. The company’s revenue in the second quarter grew 27.1% year over year to $23.3 billion and beat revenue estimates by $802.29 million. The stock has gained 15% in the last twelve months.
Johnson & Johnson (NYSE: JNJ) currently pays its shareholders an annualized dividend of $4.24 per share and offers a dividend yield of 2.44%.
At the end of the second quarter of 2021, 88 hedge funds in the database of Insider Monkey held stakes worth $7.05 billion in Johnson & Johnson (NYSE: JNJ), up from 81 in the preceding quarter worth $6.91 billion.
Just like Visa Inc. (NYSE: V), The Coca-Cola Company (NYSE: KO), Berkshire Hathaway Inc. (NYSE: BRK-B), JPMorgan Chase & Co. (NYSE: JPM), and Exxon Mobil Corporation (NYSE: XOM), Johnson & Johnson (NYSE: JNJ) is a good stock to invest in, according to market analysts.
In its Q2 2021 investor letter, Distillate Capital mentioned Johnson & Johnson (NYSE: JNJ) and discussed its stance on the firm. Here is what the fund said:
“The largest additions in the rebalance, Johnson & Johnson was around 50 and 40 basis points incrementally. J&J underperformed in the quarter while its normalized free cash flows held steady and so its position size was topped off to match the stable cash flows.”
Click to continue reading and see 5 Best Blue Chip Stocks to Invest In.
Suggested articles:
- 10 Cheap Blue-Chip Dividend Stocks to Invest In
- 15 Most Valuable Blockchain Companies in the World
- 10 Best Tech Growth Stocks to Buy Right Now
Disclosure: None. 15 Best Blue Chip Stocks to Invest In is originally published on Insider Monkey.
