Best Blue Chip Stocks To Buy in July 2024

shironosov / Getty Images/iStockphoto
shironosov / Getty Images/iStockphoto

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.

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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.

Best Blue Chip Stocks

These stock picks are some of the best-known, top-performing and most popular blue chip stocks:

  1. Pfizer (PFE)

  2. Coca-Cola (KO)

  3. Amazon (AMZN)

  4. Apple (AAPL)

  5. Walmart (WMT)

  6. JPMorgan Chase (JPM)

  7. Berkshire Hathaway (BRK.B)

  8. Johnson & Johnson (JNJ)

There is no blue chip stock that will be the best choice for all investors, but these eight are a great place to start investing in stocks.

1. Pfizer (PFE)

  • Price: $28.22

  • Market cap: $157.87 billion

  • Dividend yield: 5.95%

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% in 2022 and 44% in 2023, the company’s worst year on record according to Forbes. 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.

Not only is Pfizer a top blue chip stock — it’s also one of the best blue chip dividend stocks. While you’re waiting for the share price to recover, you can enjoy earning a hefty 5.95% yield.

Even with all of its ups and downs, the stock has gained almost 15-fold since it traded at about $2 per share in 1990.

2. Coca-Cola (KO)

  • Price: $63.28

  • Market cap: $271.65 billion

  • Dividend yield: 3.07%

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 nine drinks per day during its first year in business. Today, it sells 1.9 billion servings per day.

It has a market cap of over $270 billion and operates in more than 200 countries. It owns more than 200 companies, including Schweppes, Sprite, Vitaminwater, Minute Maid, Fanta and BodyArmor.

3. Amazon (AMZN)

  • Price: $197.20

  • Market cap: $2.08 trillion

  • Dividend yield: N/A

Amazon is the No. 2 retailer in the world, behind industry giant Walmart, but it’s the indisputable leader when it comes to online sales. Its business model proved especially durable during the pandemic, and the stock gained more than 76% 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 1.14, the stock trades about 14% more wildly than the market as a whole. This is amply demonstrated by the stock’s 49.62% plunge in 2022, followed by its 2023 rally of over 80%. It’s up 31.58% YTD thus far in 2024 as well.

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. Its fastest-growing division is advertising, and it also relies on Amazon Web Services, the company’s cloud division, for a good chunk of its profits.

4. Apple (AAPL)

  • Price: $216.75

  • Market cap: $3.37 trillion

  • Dividend yield: 0.46%

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 2023 revenues were $383 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 Dec. 2023. Aside from a blip in 2022, when the stock dropped 26.40%, Apple has been a machine, providing shareholders with returns of 82%, 34% and 49% in 2020, 2021 and 2023, respectively. The stock is trailing the market thus far in 2024, but it’s still managed a positive return of about 14.11%.

5. Walmart (WMT)

  • Price: $67.48

  • Market cap: $546.12 billion

  • Dividend yield: 1.23%

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 $546 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 84% — and it offers a modest dividend to boot.

6. JPMorgan Chase (JPM)

  • Price: $205.45

  • Market cap: $597.9 billion

  • Dividend yield: 2.24%

JPMorgan Chase is the biggest bank in the world, with assets of over $4 trillion. It’s well-known for its extensive global branch network and its impressive portfolio of credit card offerings. After dropping 15% in 2022 as interest rates were on the rise, the stock returned about 27% in 2023 and is already up 43.16% in 2024.

7. Berkshire Hathaway (BRK-A)

  • Price: $610,460

  • Market cap: $875.76 billion

  • Dividend yield: N/A

Berkshire Hathaway is one of the biggest conglomerates in the world, with one of the richest people in the world, Warren Buffett, as its CEO. But Buffett is much more than a billionaire — he’s one of the most popular and quoted financial geniuses in the world, having garnered the nickname “The Oracle of Omaha” for his stock-picking prowess and his Midwest residence.

Berkshire Hathaway itself owns some of the most famous companies in the world, from See’s Candies and BNSF Railway to Geico, Dairy Queen and Fruit of the Loom. Its investment portfolio holds plenty of blue chip stocks, including Apple, Coca-Cola and American Express. Five analysts follow the stock, but three have a “buy” rating on it. The average target price is $697,410, about 13% above current levels. Note that the company has much more affordable “B” shares that trade for about $405 per share.

8. Johnson & Johnson (JNJ)

  • Price: $146.44

  • Market cap: $351.62 billion

  • Dividend yield: 3.39%

Johnson & Johnson is a huge pharmaceutical and medical devices company that also owns many of the most popular consumer healthcare brands in the world, from Aveeno and Benadryl to Imodium, Sudafed and Tylenol. The company earned $85 billion in revenue in 2023, which translated to $35 billion in profits.

Johnson & Johnson pays a hefty dividend and has beaten earnings estimates for the past three quarters in a row. Half of the analysts tracking the company have a “strong buy” or “buy” rating on the company, with an average price target of $171.95, about 17% above current levels.

Pros and Cons of Blue Chip Stocks

Before investing in blue chip stocks, you should consider the pros and cons.

Pros

  • Stable companies with proven product lines and a history of consistent earnings

  • Typically pay a high and rising dividend

  • Less volatile than more aggressive growth stocks

Cons

  • Aren’t likely to generate outsized returns like still-growing companies

  • Are defensive but still subject to falling when the overall market drops

Alternative Ways To Invest in Blue Chip Stocks

As blue chip stocks are among the most popular types of stocks, there are plenty of ways you can invest in them without having to pick individual equities. Both traditional mutual funds and exchange traded-funds, or ETFs, allow you to buy a portfolio of blue chip stocks in a single investment, without having to do the research required to pick individual stocks.

SPDR S&P 500 ETF Trust (SPY)

The SPDR S&P 500 ETF Trust from State Street Global Advisors is an index ETF that tracks the performance of the S&P 500. The S&P 500 index contains the 500 largest U.S. companies, weighted by market cap. That means giant tech blue chips like Microsoft, Apple and Nvidia have a disproportionate impact on the index.

While the S&P 500 is what many investors think of when they track “the market,” it’s actually less broad than an index like the Russell 3000, which contains the 3,000 largest companies, including mid-cap stocks, and represents about 96% of all U.S. stocks. That said, the S&P 500 typically outperforms the Russell 3000.

SPDR S&P 500 ETF Trust is up 11.25% so far this year and 28.01% over the past year, and its dividend yields a modest 1.20%. Since its inception in 1993, the fund has increased an average of 10.26% per year, which makes it a solid core holding. The expense ratio is a very reasonable 0.0945%.

T. Rowe Price Blue Chip Growth Fund (TRBCX)

The T. Rowe Price Blue Chip Growth Fund invests at least 80% of its assets in mid- and large-cap blue chip stocks with a high-than-average potential for growth. This is an actively managed ETF, which means the fund manager hand-picks the stocks for its portfolio. The fund is up 37.53% so far this year, and it has averaged 5.95%, 14.23% and 14.08% over three, five and 10 years, respectively. It has outperformed the S&P 500 for all of those time periods except five years.

The minimum investment to open the account is $2,500 or $1,000 for an individual retirement account. But after that you can funds in increments of $100. TRBCX has a net expense ratio of 0.70%.

Vanguard Dividend Appreciation ETF (VIG)

The Vanguard Dividend Appreciation ETF is an index fund that tracks the S&P U.S. Dividend Growers Index of companies that have a record of increasing their dividends over time. The portfolio contains 339 holdings, 81% of which are large-cap stocks. They include Dividend Aristocrats like Johnson & Johnson, Coca-Cola, AbbVie and Exxon Mobile, which is also a top-five holding.

This fund has a low expense ratio of 0.06%. Its dividend yields 1.86% as June 30. With gains of 8.07% year to date and averaging 14.56%, 7.72% and 11.07% over one, three and 10 years, respectively, it’s a solid performer.

Don’t See Anything You Like? Consider These Other Top Blue Chip Stocks

In Conclusion

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 6.80% 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 July 1, 2024.

This article originally appeared on GOBankingRates.com: Best Blue Chip Stocks To Buy in July 2024

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