Start 2017 off right with these two dozen-plus stocks.
As we all know, the stock market is a risky place to invest. Portfolios can rise or fall by 10 percent in a matter of weeks or months. Owning blue-chip stocks won’t make you immune to volatility, but it’ll bring some degree of safety to your portfolio, particularly if you buy and hold for the long run. Blue-chip stocks are those tried and true, multibillion-dollar companies known around the world. With often ubiquitous products and services, these titans of industry will be around as long as capitalism itself. Often paying dividends and always churning out gobs of cash, here are the 25 best blue-chip stocks to buy for 2017.
Apple (AAPL)
Apple is the largest public company in the world. But it didn’t get there by accident, and despite its enormity there’s still room for potential growth. The 10th anniversary of the iPhone in 2017 is expected to bring a groundbreaking new model — hopefully just the one investors have been waiting for. In the meantime, the company will keep reinvesting its $230 billion-plus cash hoard in both its business and in capital return programs, like share buybacks and Apple dividend payments.
Industry: Telecommunications equipment
Market capitalization: $580 billion
Dividend yield: 2 percent
3M (MMM)
Industrial powerhouse 3M is a real jack of all trades. The famous inventor of the Post-it note makes thousands of different products that serve customers in practically every field you can imagine: health care, automotive, mining, communications — 3M serves them all! Perhaps most remarkable is 3M’s culture of innovation: It requires that 30 percent of each division’s revenue come from products introduced in the last four years. If you’re looking for blue-chip stocks to buy, it doesn’t get more diversified, esteemed and sustainable than 3M.
Industry: Industrial conglomerates
Market capitalization: $100 billion
Dividend yield: 2.6 percent
Cisco Systems (CSCO)
If you’re an internet user, there’s a decent chance you’ve contributed to Cisco’s top line in some form or fashion. The world’s leading networking equipment maker, Cisco makes routers, switches, and storage products that are ultimately integral in making the web go. Think of Cisco as providing the plumbing of the internet. With about $70 billion on hand and counting, CSCO is a bona fide cash cow that pays a hefty dividend. What more can you ask for?
Industry: Computer communications
Market capitalization: $150 billion
Dividend yield: 3.5 percent
Exxon Mobil Corp. (XOM)
From mid-2014 on, energy markets have been in pretty much a constant state of turmoil. And throughout it all, Exxon has managed to stand tough. As smaller oil drillers went belly up, were acquired, or took on unsustainable amounts of debt, Exxon flexed its muscles and used its size to its advantage, weathering tumbling crude prices by cutting capital expenditures and focusing on its refining business, which thrives as prices fall. As crude prices normalize, Exxon shares could climb back to pre-fall levels soon.
Industry: Integrated oil
Market capitalization: About $360 billion
Dividend yield: 3.4 percent
General Electric Co. (GE)
GE, by the time of the Great Recession, could essentially be considered a financial institution. That deviation from its original focus would cost it dearly as the crisis unfolded, but GE investors today are all the better for it. Post-crisis, GE decided to unwind its finance arm, GE Capital, and by August 2016 had reached agreements to sell $192 billion worth of the $200 billion it pledged to shed. The leaner GE has pledged to return much of that to shareholders.
Industry: Industrial conglomerates
Market capitalization: $280 billion
Dividend yield: 3 percent
Home Depot (HD)
Home Depot, the largest home improvement retailer on the planet, has found its groove in the years after the recession. Since December 2011, HD stock roared 250 percent higher — compared to just a 70 percent increase in the Dow Jones industrial average — as it benefited from an economic recovery and easy money policies that led homeowners to rebuild and remodel. With mortgage rates still historically low, Home Depot is as strong as ever, and at last check was on pace to return $8.4 billion to investors through dividends and buybacks throughout 2016.
Industry: Home improvement chains
Market capitalization: About $160 billion
Dividend yield: 2.1 percent
Intel Corp. (INTC)
Intel, one of the world’s leading semiconductor companies, has long been associated with making chips for PCs. It still does that, of course, but if the PC business were its only revenue stream, INTC would be in a constant state of decline. Thankfully, that’s not the case: Intel’s pivot into supplying the end markets of mobile and the Internet of Things should give it several nice sources of growth going forward. Ex-cash, Intel trades for roughly 11 times 2017 earnings.
Industry: Semiconductors
Market capitalization: $160 billion
Dividend yield: 3 percent
Johnson & Johnson (JNJ)
Johnson & Johnson is the prototypical example of a blue-chip stock. One of the 10 largest public companies in the world, JNJ has entrenched businesses in consumer goods, medical devices, and pharmaceuticals. In other words, it’s incredibly diversified. Always seeking new avenues for growth, JNJ has a promising myeloma drug in late-stage clinical trials, and may soon snap up a Swiss drugmaker, Actelion, which has two potential $1-billion-a-year drugs in development. Getting paid a sizable dividend just to hold JNJ doesn’t hurt, either.
Industry: Major pharmaceuticals
Market capitalization: $300 billion
Dividend yield: 2.9 percent
Microsoft Corp. (MSFT)
After the “lost decade” of the early 2000s, Microsoft has returned with a vengeance in recent years. CEO Satya Nadella has helmed the company during a strong shift into the cloud, where margins are much higher and subscription and usage-based billing models generate billions in recurring revenue that investors practically froth at the mouth for. Microsoft’s Azure cloud computing service is second only to Amazon Web Services, and promises to be a bright spot of growth at Microsoft for the next several years.
Industry: Packaged software
Market capitalization: $460 billion
Dividend yield: 2.6 percent
Amazon.com (AMZN)
Speaking of Amazon Web Services, that business segment has been almost solely responsible for Amazon’s recent ventures into profitability. The country’s largest online retailer has been profitable before, but never consistently — until now. The high-growth, high-margin, best-in-class AWS is just the cash cow that Amazon needs to keep up its low-cost, highly efficient, customer-centric online retail business. Shares aren’t at all cheap by traditional metrics, but Amazon’s profitability is almost destined to surge in the coming years.
Industry: Internet retail
Market capitalization: $350 billion
Dividend yield: Zero
UnitedHealth Group (UNH)
UnitedHealth is the largest health insurer in the U.S., and with each passing day it’s getting larger. UNH pleasantly surprised markets by forecasting 2017 revenue between $197 billion and $199 billion, much higher than the $196.6 billion Wall Street expected. That represents revenue growth of about 18 percent, which is incredible for a company that size. UNH’s bold decision to dramatically reduce its exposure to Obamacare has helped it avoid the pitfalls associated with high-risk customers.
Industry: Managed health care
Market capitalization: $150 billion
Dividend yield: 1.6 percent
Verizon Communications (VZ)
Verizon isn’t just one of the two bigwigs in the telecom industry, it’s also starting to flex its muscles in media and the Internet of Things as well. A series of high-profile acquisitions in recent years, including the purchases of AOL and Yahoo, telegraph Verizon’s desire to diversify its revenue stream into content and advertising, especially on mobile. Purchases of Fleetmatics and Telogis put Verizon at the forefront of the fleet management and connected car markets.
Industry: Major telecommunications
Market capitalization: About $200 billion
Dividend yield: 4.6 percent
Alphabet is and will be a one-trick pony with its subsidiary Google for a long time, and the search giant shows little signs of letting up. In addition to holding dominant market share in search for over a decade, GOOG is diversifying into exciting new areas like self-driving cars, virtual assistants, the connected home, and — perhaps most importantly — smartphones. The Google Pixel looks like the first Google-made phone that will actually be relevant, and could even meaningfully compete with the iPhone.
Industry: Internet software/services
Market capitalization: About $520 billion
Dividend yield: Zero
Berkshire Hathaway (BRK/B, BRK/A)
It’s tough to go wrong with Warren Buffett’s holding company, which owns an enormously diversified spectrum of businesses, and a portfolio of minority positions in blue-chip stocks like American Express Co. (AXP), Coca-Cola Co. (KO), and International Business Machines (IBM), to name a few. Buffett’s stubborn refusal to pay a dividend in favor of reinvestment has worked phenomenally well to date. At 86, Buffett will soon be leaving behind a group of businesses with cash flows so strong and businesses so fundamental that the company can never go under.
Industry: Financial conglomerates
Market capitalization: $390 billion
Dividend yield: Zero
Facebook (FB)
With CEO Mark Zuckerberg at the helm, Facebook turned social networks into something not so trivial. Facebook hasn’t been a blue-chip stock for long, but should be entrenched for some time, as its ubiquity has allowed it to gain footing in messaging, money transfers and publishing. With a digital advertising empire rivaled only by Google, Facebook is using its enormous cash flows to venture into areas like virtual reality, video and artificial intelligence, which could in turn drive further growth.
Industry: Internet software/services
Market capitalization: $330 billion
Dividend yield: Zero
Walgreens Boots Alliance (WBA)
Walgreens and CVS (CVS) are far and away the two most dominant drugstores on the market. Operating in an oligopoly is never too raw a deal, and believe it or not, Walgreens’ competition is about to slim down even further. In the first quarter of 2017, Walgreens will complete its planned acquisition of Rite Aid (RAD), continuing the trend of industry consolidation and increasing WBA’s pricing power and scope.
Industry: Drugstore chains
Market capitalization: $90 billion
Dividend yield: 1.8 percent
Duke Energy Corp. (DUK)
Duke Energy is a regional electric utilities company operating in the Midwest and Southeast. It generates energy by using coal, hydroelectric power, natural gas, oil and nuclear-based facilities. As with most utilities stocks, the main reason DUK would be attractive to investors is its sizeable dividend. Utilities companies like DUK tend to be favorites of conservative investors, who enjoy its regular, predictable cash flows as well as the industry’s high barriers to entry.
Industry: Electric utilities
Market capitalization: $50 billion
Dividend yield: 4.6 percent
General Motors Co. (GM)
General Motors, one of the great titans of American history, found itself in dire straits during the 2008-2009 crisis, when it was forced to take a massive $50 billion bailout. Today? GM is a profit machine. Operating cash flow nearly doubled between 2013 and 2015, jumping from $1.6 billion to $3.1 billion. Recognizing the ride-hailing trend, GM also invested $500 million in Lyft, becoming a 9 percent owner. Paying a big dividend and trading at 6 times forward earnings, it’s tough to find another blue-chip stock priced as attractively as GM.
Industry: Motor vehicles
Market capitalization: $55 billion
Dividend yield: 4.2 percent
Target Corp. (TGT)
For a retailer doing $70 billion in annual sales, Target certainly is underappreciated. TGT has lagged the market in recent years as retail investors have showered Amazon with money instead. You won’t get huge growth from Target, but you’ll get a stake in a solid business that’s cutting costs, boosting online sales, buying back shares. Online revenue jumped 26 percent in the third quarter. With a 3 percent dividend to boot, TGT also pays investors just to sit around.
Industry: Discount stores
Market capitalization: $45 billion
Dividend yield: 3.1 percent
Bank of America Corp. (BAC)
Bank stocks are poised to have a great year in 2017; the nascent Trump administration, with former Goldman Sachs (GS) partner Steven Mnuchin as the Treasury secretary, will almost certainly pursue financial deregulation. More importantly, interest rates are expected to start rising in earnest again, boosting bank earnings. Most banks, from Wall Street elites like Bank of America to small regional banks, should benefit from these new policies.
Industry: Major banks
Market capitalization: $210 billion
Dividend yield: 1.4 percent
Allergan (AGN)
Allergan, which formerly was known for its prowess in generic drugs, sold that division of its business for about $40 billion. The remaining business, which is concentrated in branded drugs, medical devices, and biologics, has been putting the money to use with small-scale M&A deals for research and development-focused companies, with an eye to future growth. Along with the rest of its portfolio, its blockbuster drug, Botox, makes this stock look pretty attractive at about 12 times forward earnings. Better yet, AGN will start paying a 70-cent quarterly dividend in the first quarter of 2017.
Industry: Major pharmaceuticals
Market capitalization: $70 billion
Dividend yield: Zero
Stryker Corp. (SYK)
If you’ve ever been cooped up in a hospital, you might be familiar with Stryker’s hospital beds. The medical device maker manufactures everything from hip implants and knee joint replacements to surgery equipment and spinal implant products. After a series of growth-focused acquisitions, revenue is growing by double digits for the first time in years. The modest dividend won’t make anyone rich, but it’s nothing to complain about.
Industry: Medical specialties
Market capitalization: $40 billion
Dividend yield: 1.3 percent
Procter & Gamble Co. (PG)
The largest consumer goods company in the world, Procter & Gamble has been a go-to blue-chip stock for decades. It boasts an unparalleled portfolio of $25 billion consumer brands: Bounty, Pampers, Tide, Gillette, Duracell, Head & Shoulders, Mr. Clean, Charmin and Crest are just a handful of the iconic brands under its umbrella. Odds are, you have one of PG’s products at home right now. Why not invest, and pay yourself every time you go shopping? Procter & Gamble’s dividend is another selling point. The payout has risen for 59 consecutive years.
Industry: Household/personal care
Market capitalization: $220 billion
Dividend yield: 3.3 percent
Boeing Co. (BA)
Aerospace giant Boeing makes both commercial and military aircraft, as well as systems for space travel. Among its current and past products are 747s, B-2 bombers, the Apollo lunar spacecraft and a number of missiles and helicopters. Between 2010 and 2015, commercial aircraft deliveries increased by 65 percent, and military aircraft and satellite deliveries jumped by 57 percent. Over the next 20 years, Boeing expects global demand for airplanes to eclipse the $5.9 trillion mark. Until the day air and space travel becomes irrelevant, Boeing will be around and thriving.
Industry: Aerospace and defense
Market capitalization: $90 billion
Dividend yield: 2.9 percent
Visa (V)
Even as global economic growth has slowed down in recent years, Visa’s growth has managed to be pretty robust. Analysts expect revenues to jump 17 percent in fiscal 2017, bolstered by the company’s 2016 acquisition of Visa Europe for $23.4 billion. That sort of top-line growth is enviable in a blue-chip stock, and better than rival Mastercard (MA), which is expected to grow by just 10 to 12 percent for the next several years.
Industry: Finance/rental/leasing
Market capitalization: $170 billion
Dividend yield: 0.9 percent
More from U.S. News
10 Ways to Invest in Pharmaceuticals With ETFs
8 Stocks to Buy For a Starter Portfolio
8 of the Most Incredible Investments of the 21st Century
The 25 Best Blue-Chip Stocks to Buy for 2017 originally appeared on usnews.com
