There’s a reasonable argument to be made that investors should load up on blue-chip stocks regularly. After all, large and well-established firms with long track records of success are likely to continue to be successful. Growth in blue-chip companies may be lower than it is in the tech sector but safety and lower volatility arguably tip the balance in favor of blue chips.
That notion holds as true now as it ever has. Whether it’s your first time investing or you adhere to a strategy like dollar cost averaging, now is a great time to pick up one or more blue-chip stocks.
American Tower REIT (AMT)
American Tower REIT (NYSE:AMT) is a stock that will provide investors with a few important things. One, it will provide income through a dividend. As a real estate investment trust (REIT), AMT is legally obligated to distribute 90% of taxable earnings to shareholders. Two, American Tower REIT is a relatively safe way to invest in the growth of 5G as a specialty REIT in the communications tower leasing space.
On a per-share basis, American Tower’s distributions increased by 9.8% in Q2 year-over-year. Yet AMT stock has fallen throughout 2023 as net income has decreased. Net income has been negatively affected by unfavorable foreign exchange rate fluctuations. Remunerations to the U.S. headquarters are more expensive, decreasing income overall. The majority of American Tower’s revenue is internationally derived. That means AMT will benefit from a weakening dollar overall.
American Tower REIT is a strong choice in blue-chip stocks for the fact that revenues have grown quickly over the past 3 years combined with its 5G exposure
Schlumberger (SLB)
Schlumberger (NYSE:SLB) stock recently fell following second-quarter earnings that disappointed on a muted domestic drilling outlook. An increasingly positive outlook for international and offshore drilling was not sufficient to prevent the decline. Drilling productivity numbers can be found here for U.S. domestic markets.
Schlumberger provides services to firms that engage in drilling so it clearly hopes that drilling volumes will increase both domestically, internationally and offshore. However, I’d argue that the reaction was overblown even if SLB shares have basically been flat. Revenues and earnings were pretty much right where Wall Street expected. Revenues increased by 20% and EPS jumped by 44% year-over-year.
There’s another reason to believe in Schlumberger outside of its strong quarterly growth figures. Schlumberger derives more than 75% of its sales from international markets. Remember, the international outlook is strong. That should give investors reason to be optimistic at this point because share prices have remained flat but its greatest revenue producer is expected to be strong.
AbbVie (ABBV)
Most investors know that AbbVie (NYSE:ABBV) stock is facing a rough patch as Humira continues to fall off after its reign as a blockbuster drug. If the company and stock are to remain at the top, it will be because of other drugs picking up the slack.
There’s evidence that that is exactly what’s happening.
Humira is the leading drug within AbbVie’s immunology portfolio and its leading revenue producer overall. Luckily, as Humira comes off patent and sales slump other immunology products are ramping up. Humira sales fell by 25% year-over-year. However, Rinvoq and Skyrizi are filling the void. Both drugs’ sales increased by more than 50% in Q2.
Revenues were roughly $400 million ahead of analysts’ expectations. That’s excellent news for the company since the beat was driven by non-Humira sales. It’s exactly what investors should be hoping for from AbbVie. It paves the way forward for the firm to transition into new revenue streams perhaps quicker than expected. That softens the blow of a declining Humira. Don’t forget, ABBV includes a nice dividend, making it an ideal option in blue-chip stocks.
Colgate-Palmolive (CL)
Colgate-Palmolive (NYSE:CL) has done what a lot of consumer goods firms have done in 2023. It’s raised prices while volumes have slipped. Fortunately, it has worked and resulted in increasing sales.
For example, sales volumes fell by 1.5% in the second quarter but net sales increased by 7.5%. CPG firms have clearly been able to grow by charging more for their products. Inflation numbers show that to be the case. And shoppers are fully aware of it as well.
Yet, it hasn’t negatively affected firms across the sector for the most part. Investors haven’t punished CPG firms. That could be changing soon. Investors are growing tired of the higher prices and lower volumes equation as inflation subsides.
Colgate-Palmolive hasn’t stated that it anticipates volume growth even as Procter & Gamble (NYSE:PG) did. That’s the gamble: If Colgate-Palmolive can push sales volumes up this quarter it’ll grow quickly. The company does expect overall sales to grow by as much as 8% this year though.
Texas Instruments (TXN)
Texas Instruments (NASDAQ:TXN) stock has been quite volatile in 2023 even though its beta of 1 indicates it moves in step with the broader market. The reason that matters is that it opens a possibility to play the shares in the short term.
TXN shares have shown distinct peaks and valleys this year moving from $160 to $180 and back to $160 again. It is again moving toward $160 after sales contracted in Q2 and the firm gave a Q3 revenue forecast just below the midpoint. The midpoint of $4.59 billion is slightly higher than the $4.55 billion midpoint Texas Instruments gave. However, it ranges as high as $4.74 billion so the company has the potential to surprise positively.
That’s a gamble worth taking given that Texas Instruments is a relatively stable firm in a semiconductor industry that is known to be anything but. Further, Texas Instruments pays an additional 3% through dividends.
Telefonica (TEF)
Telefonica (NYSE:TEF) is a Spanish telecommunications firm that provides voice, data and internet. It’s also a penny stock that trades for under $4 and includes a nice dividend. Let’s start there because the upside inherent in the firm is its most attractive factor.
There’s roughly 33% upside in TEF shares for investors who are willing to hold the shares for a year. It trades for less than $4 but including dividends and price predictions, it is reasonable to expect that shares could provide $5.29 of value in a year’s time.
Telefonica also offers value in that its price-to-earnings ratio is better than 61% of industry-wide competitors.
Telefonica’s revenues grew by 4.1% and 3.3% in the first half and A2, respectively. The firm increased guidance for organic revenue growth from low single digits to 4% when it released earnings. That’s generally a good sign overall that the company can reach its goals moving forward and increase share prices.
Medtronic (MDT)
I like Medtronic (NYSE:MDT) stock because it’s safe and provides income to investors. The medical device firm hasn’t traded as low as it does currently since the pandemic erupted. It’s quite cheap.
However, it has also been very reliable for investors over the last decade. MDT shares returned 7.27% during that period on an annualized basis. That’s well ahead of the average stock during the same period. Additionally, that figure excludes Medtronic’s dividend which pays above 3% and has not been reduced since 1978. Medtronic is also a low-beta stock that tends to preserve investor capital well.
There’s good reason to believe that Medtronic will continue to grow in 2023 and well beyond. The company has more than 210 active clinical trials underway and has invested $2.7 billion in R&D this year. Overall, MDT shares are simply a reasonable investment, especially for investors looking to add healthcare blue-chip stocks to their portfolios.
On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
