Portfolio construction is an art, not a science. Different investors prefer different strategies when building their portfolios: growth investors tend toward growth investments while others favor value stocks or smaller companies with lesser known names. There’s no single formula when it comes to portfolio creation – no right answers exist here! At least, recent events demonstrate that blue-chip stocks remain an ideal investment for portfolio growth. As many problematic innovation stocks and financial reopening trades have seen their fortunes fluctuate dramatically, blue chips tend to offer more stable, predictable returns. Companies with a long track record of steadily growing earnings and profits that can withstand occasional economic recessions tend to provide the most reliable long-term returns. At a time when interest rates are at historically high levels and geopolitical tensions have never been higher, the case for owning protective blue-chip stocks becomes even stronger; here are 10 of the best blue-chip stocks to consider investing in for 2022.
1) Verizon Communications Inc. (ticker: VZ)
Verizon Mobile is one of the nation’s three largest mobile phone networks and recently has seen stock slip a couple percentage points from its 52-week lows, yet still manage to outshone rivals like AT&T and Sprint in growth and income investing. Verizon stands out as an attractive pick among them all for growth investors looking for long-term dividend income and capital appreciation. AT&T Inc. (T) has cut its dividend as part of its complicated corporate restructuring efforts, while T-Mobile US Inc. (TMUS) does not pay out profits at all, leaving Verizon as the safest investment choice. Verizon shares are currently yielding 5% profit yield and are back down to their March 2020 trading levels at the height of COVID-19 sell-off. In time, however, Verizon should begin reaping benefits of 5G deployment and see opinion turn upward. In the meantime, shares are selling for below multiple times earnings.
2) Walmart Inc. (WMT)
One of the only large American companies that managed to maintain its value during the great financial emergency was Walmart, holding steady at market peak until bottoming in March 2009 for investors who purchased WMT stock at that point in time. When market bottomed, investors who held onto their WMT stocks actually saw some small profits when their holdings bottomed out and saw the market recover somewhat in March 2009. Walmart is known to be an excellent protector of its blue-chip stock. When the economy falters, some customers must trade down and find more value in their purchases; Walmart as the go-to place for everyday low prices can fill this need perfectly. Walmart enjoyed an exceptional surge of demand in 2020, yet results have since tapered off due to inflation and rising labor costs weighing on profit margins. Yet as the economy weakens under surging gasoline costs, Walmart could experience another period of solid outperformance.
3) Kimberly-Clark Corp. (KMB)
Kimberly-Clark, a market leader in toilet paper production and other hygiene related items, experienced exceptional sales growth during 2020 as a demand surged for its product. In 2021, however, this led to a distinct slowdown as many individuals found themselves with excess inventory of Kimberly-Clark products that required considerable time and energy to dispose of. Kimberly-Clark’s profits have taken a dive since 2020 due to inflationary increases in input expenses such as wood mash; analysts anticipate a rebound towards pre-pandemic levels of profitability by 2023, which would equate to around $7 per share earnings and only 17 times forward price-earnings ratio; additionally, Kimberly-Clark offers a 3.8% dividend yield on shares.
4) Exxon Mobil Corp. (XOM)
Exxon Mobil has long been seen as an outstanding energy investment. Boasting an immense global reach and ownership of an extensive variety of oil and gas fields, refineries, transportation assets, etc. Exxon Mobil tends to be countercyclical in its approach. Exxon Mobil’s commitment to new asset investments shows its resilience when industry conditions stagnate. Exxon continued investing heavily during the 2014-2020 oil bear market by pouring cash into its massive new offshore Guyana oilfield when many competitors reduced spending. At present, with oil prices back in triple digits, Exxon is reaping the fruits of its strategic investment decisions. Notably, Exxon was one of only a select group of energy players not to cut its profits during COVID-19’s slump; making them an appealing option for income investors as their shares currently yield 4.3%.
5) JPMorgan Chase And Co. (JPM)
With interest rates on the rise and the Federal Reserve finally increasing its benchmark rate, one might assume bank stocks would surge upward. Unfortunately, that has not happened; JPMorgan Chase shares are down nearly 20% since their recent highs. However, traders appear more concerned about a slower economy than the potential high profit margins banks will soon experience from rising interest rates. That could present investors an incredible opportunity to profit from higher profit margins when rising rates finally make a move upward. JPM stock is trading near multiple times earnings and should experience an upswing as interest rates move higher and solid activity increases in areas like investment banking. At present, it offers a 2.9% profit yield and has an attractive starting valuation.