5 Best Blue Chip Stocks To Buy in 2023
Blue chip stocks are the foundation of investment portfolios far and wide for good reasons. The first is familiarity — many blue chips are household names. These stocks are shares of large, reliable companies — their solid reputations are based on long-running, sound financial decisions and strong overall performance.
Investors are drawn to the so-called blue chips because they are the biggest companies in the world. Their market caps are measured in billions, hundreds of billions or even trillions of dollars, and their brands are recognized worldwide. They’re not foolproof — no equity investment is — but these known quantities take some of the guesswork out of stock analysis and selection.
See: 3 Things You Must Do When Your Savings Reach $50,000
Keep reading to learn more about the biggest and best-known companies — and to get acquainted with some of the best blue chip stocks on the market.
What Are the Best Blue Chip Stocks To Buy Right Now?
These are some of the best-known, top-performing and most popular blue chip stocks:
There is no blue chip stock that will be the best choice for all investors, but these five are a great place to start.
1. Pfizer (PFE)
Price: $38.65
Market cap: $217.457 billion
Pfizer has fallen on hard times as of late. After a big vaccine-fueled pop of 60.42% in 2021, the stock has faltered in recent years, dropping 13.23% in 2022 and 24.59% YTD in 2023. But if you’re a believer in the long-term resilience of blue chips in general — and pharmaceutical companies specifically — those losses could prove to be a good entry point for Pfizer.
While you’re waiting for the stock to recover, you can enjoy earning a hefty 4.24% dividend. Even with all of its ups and downs, the stock has gained about 38-fold since it traded at about $1 per share in 1990.
2. Coca-Cola (KO)
Price: $60.75
Market cap: $260.296 billion
A longtime favorite of Warren Buffett, Coca-Cola is arguably the most instantly recognizable brand in the world and an intractable part of American culture. The company sold 25 bottles of soda during its first year in business. Today, it sells 1.9 billion per day as the world consumes 10,000 Coca-Cola soft drinks per second.
It has a market cap of over $260 billion and operates in more than 200 countries on every continent except Antarctica. It owns more than 200 companies, including Schweppes, Sprite, Vitaminwater, Minute Maid, Fanta and BodyArmor.
3. Amazon (AMZN)
Price: $125.30
Market cap: $1.299 trillion
The No. 2 biggest retailer in the world — behind only Walmart — Amazon is the undisputed king of e-commerce. Its business model proved especially durable during the pandemic, and the stock gained more than 31% in 2020 alone.
Although the stock is considered a blue chip thanks to its dominant position in retail, it’s still much more volatile than your average mom-and-pop stock. With a beta of 1.26, the stock trades about 26% more wildly than the market as a whole. This is amply demonstrated by the stock’s 49.62% plunge in 2022, followed by its YTD rally of over 49% so far in 2023.
Some analysts are concerned about consumers tightening spending in response to inflation and fears of recession, but Amazon’s profits aren’t solely reliant on retail. In fact, its fastest-growing division is Amazon Web Services, the company’s cloud division, which helps keep Amazon profitable.
4. Apple (AAPL)
Price: $179.58
Market cap: $2.814 trillion
Arguably the ultimate blue chip stock, Apple became the first company ever to achieve a $1 trillion market cap in 2018. In January 2022, it became the first company to reach $3 trillion. Founded in a garage by Steve Wozniak and Steve Jobs in 1976, Apple was at the forefront of every major innovation in the digital age, including personal computers, laptops, tablets, mp3 players, smartwatches and smartphones.
Apple’s 2022 revenues were $394.33 billion, and it earned just under $100 billion in profits. Consistent results like these have propelled the stock to yet another new all-time high in June 2023. Aside from a blip in 2022, when the stock dropped 26.83%, Apple has been a machine, providing shareholders with returns of 60.11% and 33.82% in 2020 and 2021, respectively. As of June 5, 2023, the stock’s up another 38% YTD.
5. Walmart (WMT)
Price: $149.80
Market cap: $400.425 billion
Still the world’s biggest retailer, Walmart bucked the trend of brick-and-mortar stores succumbing to the onslaught of e-commerce. It now has a market cap of over $400 billion and operates more than 10,500 stores.
Throughout all the ups and downs of the last five years, Walmart has delivered its shareholders gains of roughly 77% — and it offers a current yield of 1.52% to boot.
Don’t See Anything You Like? Consider These Other Top Blue Chip Stocks
AbbVie (ABBV)
Berkshire Hathaway (BRK)
Nike (NIKE)
Lockheed Martin (LMT)
ONEOK, Inc. (OKE)
Honeywell International (HON)
Procter & Gamble (PG)
DTE Energy Company (DTE)
The Hershey Company (HSY)
Mastercard (MA)
Microsoft (MSFT)
Marathon Petroleum Corporation (MPC)
McDonald’s Corporation (MCD)
In Conclusion
Blue chip stocks are among the safest and most secure buys that equity investors can add to their portfolios, which is why most experts advise novices to start their investing journeys with brand-name companies.
Blue chips tend to be safer and more stable than smaller companies thanks to their cash, clout, name recognition and resources — but always stay tuned-in and actively involved with your holdings. In equity investing, setting and forgetting a portfolio that you expect to run on autopilot is a recipe for regret.
FAQ
What is the safest blue chip stock?
There is no such thing as the "safest" blue chip stock. Although blue chip stocks are among the largest and most successful companies in the world, they are still stocks, meaning they can occasionally undergo double-digit percentage drops. This is why you might consider owning a portfolio of blue chip stocks instead of just a single name, as the bulk of your investments can power on while the one that is temporarily out of favor finds its footing.
However, blue chip companies earned the moniker due to their dominant positions in their industries, their good management, and their copious cash flow. Over the long run, owning them is generally safer than many of the more aggressive names that seem to pop up with regularity in the financial news.
Are blue chip stocks worth investing in?
If you're looking for long-term growth – typically, with a sizable income component to boot – then blue chip stocks are definitely worth investing in. You're not likely to double your money overnight, but if you're looking for consistently profitable companies that cast off large dividends and are less volatile than the overall market, you'll generally be happy with investing in blue chips.
How risky are blue chip stocks?
Blue chip stocks are generally less volatile than the overall market, and they are certainly less risky than aggressive growth stocks. However, if the S&P 500 index falls into a bear market, blue chips are not always immune. While they generally recover over the long run, you'll have to have the stomach to endure the occasional downdraft.
In other words, blue chips are riskier than ultra-conservative investments like Treasury bills, but they are less risky than speculative, pure growth stocks.
What blue chip stocks should you buy in a recession?
Stocks that tend to hold up well in a recession are those that provide necessary goods and services that people buy regardless of the economic environment. Walmart, for example, provides necessities like food, toothpaste and other personal hygiene products that people buy even during a recession. Consumer staples companies typically hold up better during a recession than those that sell more discretionary items or experiences, such as cruise lines.
Is Apple a blue chip stock?
Apple is the very definition of a blue chip stock in today's market. As the largest company in the entire world, the stock has an inordinate effect on the day-to-day trading in the U.S. stock market. Apple is so big it comprises almost 7.5% of the entire S&P 500 index – which includes another 499 stocks. As one of the most consumer-friendly businesses in history, Apple's dominance seems likely to continue.
Daria Uhlig and Andrew Lisa contributed to the reporting for this article.
Stock prices are accurate as of market closing on June 5, 2023.
This article originally appeared on GOBankingRates.com: 5 Best Blue Chip Stocks To Buy in 2023
