InvestorPlace - Stock Market News, Stock Advice & Trading Tips
Blue chip stocks offer more stability than high-flying growth stocks. While stable stocks often have lower returns, they can still outperform the market.
There’s plenty of life left in 2024, but the first few days featured losses for many stocks. During those few days of losses, some people may have thought about investing in blue chip stocks. Investors shouldn’t abandon promising growth stocks just because of a few bad days, weeks or months. Investors with 10 to 20-year timeline horizons have more flexibility to wait out any turbulence.
However, it’s good to diversify your portfolio with a mix of growth stocks and blue chips. Some blue chips actually double as growth stocks, delivering promising gains. These are some of the blue-chip stocks to consider for long-term stability.
Procter & Gamble (PG)
Source: gyn9037 / Shutterstock
Few corporations can matchProcter & Gamble’s(NYSE:PG) level of stability. The company has been in business for almost 200 years and offers a generous 2.50% dividend yield. The conglomerate sells many essential household items people will buy during a recession.
TheP&G brandsinclude baby diapers, razors, laundry products, baby-safe detergents, facial tissues, creams, skincare, dishwashing products and others. The company has many household name brands in its portfolio.
Procter & Gamble ended the year with a slight loss for investors. The company has done better in the long run, with a 64% return over the past five years.
The company doesn’t have the type of stock to beat the market. However, it offers stability during economic uncertainty. PG stock only dropped by roughly 7% in 2022. On the other hand, theS&P 500lost almost 20% of its value in 2022. Tech stocks performed much worse.
Investors won’t have to worry about the company going out of business. High growth days are over, but the stock can still generate positive returns and steady cash flow for investors.
IBM (IBM)
IBM(NYSE:IBM) makes it on the list for the same reasons as Procter & Gamble. The company’s high growth days are over, but it offers a dividend yield above 4% at a 21 P/E ratio. Shares gained 11% over the past year and are up by 37% over the past five years.
IBM has been around for over 110 years and recently made investments in cybersecurity and cloud computing that could reignite growth. Those investments helped the company report a 4.6% year-over-year revenue growth in thethird quarter. The company’s software segment generated the most growth, which came in at 7.8% year-over-year.
WhileMicrosoft(NASDAQ:MSFT) is the better cloud and tech stock for growth-oriented investors, IBM offers more stability due to a more generous valuation. IBM gained 5% in 2022, not including its dividend. Microsoft shares dropped by almost 25% during the same stretch.
IBM has endured many economic cycles and offers a high yield for investors. While telecom giants feature higher dividend yields, IBM is more likely to appreciate instead of only being a dividend play.
Alphabet (GOOG, GOOGL)
Source: IgorGolovniov / Shutterstock.com
Alphabet(NASDAQ:GOOG, NASDAQ:GOOGL) is the riskiest stock of the three but also has the most upside. However, the tech conglomerate doesn’t have as much risk as most growth stocks due to its dominance in the advertising industry. Google and YouTube are the two most popular websites on the web, leading to significant web traffic for the company.
Alphabet has also been the biggest winner on the list as it has returned roughly 160% over the past five years. The stock can run circles around most equities and has healthy profit margins.
Alphabet closed out thethird quarterwith an 11% year-over-year revenue growth and 41% year-over-year net income growth. The company’s Cloud revenue grew from $6.9 billion in Q3 2022 to $8.4 billion in Q3 2023. The notable increase exceeded the growth rate for advertising revenue and can fuel more growth for the company.
Alphabet is continuing to expand its business so it isn’t reliant on ad revenue. Google Cloud is a great start, and even the company’s Pixel smartphone is picking up some momentum. The devicereached 40 million all-time sales since its 2016 launch. Investors shouldn’t expect Alphabet to dethrone the top players in the smartphone industry, but its little slice of the pie appears to be getting bigger.
On the date of publication, Marc Guberti did not hold (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 theInvestorPlace.com Publishing Guidelines.
Marc Guberti is a finance freelance writer at InvestorPlace.com who hosts the Breakthrough Success Podcast. He has contributed to several publications, including the U.S. News & World Report, Benzinga, and Joy Wallet.
More From InvestorPlace
- The #1 AI Investment Might Be This Company You’ve Never Heard Of
- Musk’s “Project Omega” May Be Set to Mint New Millionaires. Here’s How to Get In.
- The Rich Use This Income Secret (NOT Dividends) Far More Than Regular Investors
The post The Next Big Blue Chips: 3 Stocks to Buy for Long-Term Stability appeared first on InvestorPlace.
