The stock market is a mess right now, with the S&P 500 index on the verge of entering a bear market defined as a decline of 20% or more from recent highs. The technology heavy Nasdaq-100 index is already in bear market territory having fallen nearly 30% so far this year.
Volatility has been the only constant as investors dump equities with interest rates on the rise and as fears grow that the global economy will fall into a recession in this year’s second half. So, what’s an investor to do amid all the market churn and damage?
The best strategy for long-term investors is to take positions in stable blue-chip stocks that can weather the current volatility and emerge stronger on the other side. And many of the very best blue-chip stocks are on sale right now having dropped to fresh 52-week lows.
Here are four stable blue-chip stocks to buy for today’s volatile market:
American Express (AXP)
New York-based American Express Company (NYSE:AXP) has been a going concern since 1850. Over more than 170 years, the credit card issuer has weathered everything from the Great Recession of the 1930s to the Great Resignation of today. And the company has rarely, if ever, let shareholders down, including Warren Buffett.
Even amid this year’s market volatility, AXP stock is only down 8% compared to a nearly 20% decline in the benchmark S&P 500. Over the past five years, the stock has delivered a nearly 100% gain to its shareholders and today trades at $155 a share.
Other reasons to like American Express among these blue-chip stocks are its dividend that currently yields 1.34%, which is good for a quarterly payout of $0.52 a share. Plus, the credit card giant bought back $7.6 billion of its own stock last year during the market churn. Dividend increases and share buybacks have been a regular means by which AMEX has rewarded investors.
Yet, despite its age, American Express continues to innovate in the world of finance, moving into new online payment methods and even cryptocurrencies.
Source: Jonathan Weiss / Shutterstock.com
The world’s biggest retailer is struggling right now with supply chain issues, inflation, and wage growth. But make no mistake, Walmart Inc. (NYSE:WMT) remains a great long-term investment.
This year, WMT stock is down 16% as its earnings have been challenged by the aforementioned issues. But over the past five years, the Bentonville, Arkansas-based company’s shares have returned more than 60% to shareholders. In the last decade, the stock has doubled to now trade at $121.70 a share.
Coming out of the pandemic, Walmart is focusing heavily on its e-commerce business, aiming to take market share from rival Amazon (NASDAQ:AMZN). To that end, Walmart is increasingly employing delivery drones and and transforming its retail outlets into departure locations for “direct-to-fridge” drop-offs after consumers order goods online.
Additionally, Walmart says it will soon start packing and shipping third-party sellers’ goods from its store locations across the U.S. and Canada. Walmart’s quarterly dividend currently yields 1.84%, or $0.56 a share and remains a dividend aristocrat among blue-chip stocks.
Source: The Art of Pics / Shutterstock.com
Investors hunting for reliable technology stocks should consider taking a position in Microsoft Corporation (NASDAQ:MSFT). The Seattle-based technology giant that was founded by Bill Gates and Paul Allen in 1975 has not only influenced how we interact with personal computers and each other online, but has also contributed greatly to shareholder wealth.
While MSFT stock has been pulled down 24% this year to $252.99 a share, it has gained 264% in the last five years and increased nearly 750% since the 2008-2009 financial crisis, distinguishing itself among the blue-chip stocks.
While Microsoft was built largely on its Windows operating system for personal computers, the company is increasingly diversifying into new areas ranging from cloud computing to artificial intelligence.
Video games also remain a big revenue generator for the company through its Xbox game console. Video games are about to become a bigger part of Microsoft’s business if its $68.7 billion acquisition of Activision Blizzard (NASDAQ:ATVI) is approved by regulators, bringing video game production in-house at the company.
Source: 8th.creator / Shutterstock.com
Stocks don’t come more blue-chip than McDonald’s (NYSE:MCD). The Chicago-based fast-food giant’s stock is down 11% this year to $237.38 a share. However, MCD stock is up 2% over the past 12 months and has gained 57% in the past five years.
The company that started in 1955 with a single hamburger stand in San Bernardino, California managed to weather the pandemic by keeping its drive-thru windows open even as in-store dining was restricted, and by pushing customers to place orders online.
McDonald’s currently has a dividend yielding 2.31% or $1.38 a share per quarter.
The Golden Arches has been in the news for two reasons lately, pulling out of Russia after 30 years due to that country’s invasion of Ukraine, and for defeating activist investor Carl Icahn’s proxy fight over the company’s treatment of pregnant pigs.
Those issues aside, McDonald’s continues to stay at the top of the fast food chain by constantly diversifying its menu and securing endorsement deals with celebrities that appeal to younger demographics. It’s a tried-and-true method that has kept McDonald’s and its shareholders successful for decades.
On the date of publication, Joel Baglole held long positions in AXP and MSFT. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
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As a seasoned financial analyst with a deep understanding of the stock market, let's delve into the concepts presented in the article from InvestorPlace. The article discusses the current state of the stock market, highlighting the potential entry into a bear market and the challenges posed by rising interest rates and fears of a global economic recession. The suggested strategy for investors in such a volatile market is to consider stable blue-chip stocks that have the resilience to weather market fluctuations.
The four recommended blue-chip stocks in the article are:
American Express Company (AXP):
- AXP, based in New York, is a credit card issuer with a history dating back to 1850.
- It has a track record of weathering economic downturns, including the Great Recession and the challenges of the present, with only an 8% decline in its stock compared to the broader market.
- AXP's stock has delivered nearly 100% gain to shareholders over the past five years and currently trades at $155 a share.
- The company is known for consistent dividend payouts, with a yield of 1.34%, and share buybacks, having bought back $7.6 billion of its own stock during the previous year.
- Despite its long history, AXP continues to innovate in the financial industry, exploring new online payment methods and venturing into cryptocurrencies.
Walmart Inc. (WMT):
- Walmart, the world's largest retailer based in Bentonville, Arkansas, faces challenges like supply chain issues, inflation, and wage growth.
- Despite a 16% decline in its stock this year, WMT has returned more than 60% to shareholders over the past five years, with shares doubling in the last decade.
- The company is focusing on e-commerce, aiming to compete with Amazon, and employing innovative strategies like delivery drones and transforming retail outlets into departure locations for online orders.
- Walmart's quarterly dividend yields 1.84%, and the company is considered a dividend aristocrat among blue-chip stocks.
Microsoft Corporation (MSFT):
- Microsoft, founded in 1975 in Seattle by Bill Gates and Paul Allen, is a technology giant that has significantly influenced personal computing, online interactions, and shareholder wealth.
- Despite a 24% decline in its stock this year, MSFT has gained 264% in the last five years and nearly 750% since the 2008-2009 financial crisis.
- Microsoft is diversifying beyond its Windows operating system, entering areas such as cloud computing, artificial intelligence, and potentially video game production through the proposed acquisition of Activision Blizzard.
- The company remains a reliable choice for investors seeking stability in the technology sector.
McDonald’s Corporation (MCD):
- McDonald's, a Chicago-based fast-food giant established in 1955, has faced challenges in 2024, with an 11% decline in its stock.
- However, MCD is up 2% over the past 12 months and has gained 57% in the last five years, showcasing its resilience.
- During the pandemic, McDonald's adapted by keeping drive-thru windows open and promoting online orders.
- The company has a dividend yielding 2.31%, and despite recent controversies, it continues to diversify its menu and secure endorsement deals with celebrities to appeal to younger demographics.
In conclusion, the article recommends these stable blue-chip stocks – American Express (AXP), Walmart (WMT), Microsoft (MSFT), and McDonald’s (MCD) – as potential investments for long-term investors amid the current market volatility. The analysis emphasizes their historical performance, dividend payouts, and strategic initiatives to navigate challenges in the market.