Some investors don’t want to deal with the drama of the stock market but still want respectable returns. While you can achieve the highest returns with high-flying growth stocks, some investors prefer to insulate themselves from high-risk investments. For example, blue-chip stocks act as a viable solution for investors who want to earn returns without committing to substantial risks. The stocks can also generate demand during any economic environment. Investors looking for undervalued blue-chip stocks may want to consider these seven picks.
Blue-Chip Stocks: Proctor & Gamble (PG)
Blue-chip stock investors look for stability. They want to buy durable companies that have stood the test of time while rewarding long-term investors. Proctor & Gamble (NYSE:PG) is a prime example of what blue-chip investors want from their stocks.
Proctor & Gamble has been providing consumer essentials since 1837. The company has provided a dividend for 133 consecutive years. Proctor & Gamble recently raised its quarterly dividend to $0.9407 per share, marking the 67th consecutive year of dividend hikes.
Proctor & Gamble isn’t a high-flying growth stock. However, the company is quite durable and posted 5% year-over-year revenue growth in the fourth fiscal quarter. It marks a strong finish to the fiscal year and an improvement from the full year’s 2% year-over-year revenue growth.
The company’s guidance calls for a 3%-4% year-over-year revenue increase in Fiscal Year 2024. Shares have gained 80% over the past five years but have traded flat year-to-date. Proctor & Gamble has a 26 P/E ratio and a 2.50% dividend yield.
Berkshire Hathaway (BRK-A, BRK-B)
Berkshire Hathaway (NYSE:BRK-A, NYSE:BRK-B) has been a solid long-term asset. Shares have gained 17% year-to-date and are up by 70% over the past five years.
The company is a conglomerate that gives investors exposure to real estate, insurance, construction, logistics, and other verticals. However, the company didn’t start out that way. Berkshire Hathaway was a small textile company when Warren Buffett began investing in it. He purchased the company in 1965 and was instrumental in the company’s expansion.
Many investors view Berkshire Hathaway as a bellwether stock that indicates how the economy is performing. While the company isn’t immune from a recession, its vast portfolio of companies and experience give it a greater margin of safety. The company has a forward price-to-earnings (P/E) ratio of roughly 20.
Blue-Chip Stocks: Visa (V)
Consumers will always use credit cards to facilitate transactions. Meanwhile, credit card companies like Visa (NYSE:V) will always generate revenue from each of those transactions. Interest payments and fees also contribute to the company’s healthy profit margins.
It’s normal for the company to report net profit margins near or above 50%. The payment card services corporation also experiences respectable revenue and earnings growth to support the profit margin. In the third fiscal quarter, Visa reported 12% year-over-year revenue growth and 22% year-over-year GAAP net income growth. These types of numbers are normal for the company, and this financial performance can support high dividend hikes in the future.
While Visa is a promising blue-chip stock with a 31 P/E ratio, the dividend yield is low at less than 1%. However, the company’s dividend history suggests a much higher yield in the future. Visa raised its quarterly dividend from $0.375 to $0.45 per share this year, marking a 20% year-over-year increase.
Microsoft (MSFT)
Microsoft (NASDAQ:MSFT) offers a meager yield below 1%. However, the company more than makes up for its low yield with strong long-term returns. Microsoft shares are up by roughly 40% year-to-date and have almost tripled over the past five years.
The company also gives investors exposure to several verticals, such as PCs, gaming, and cloud computing. Microsoft has also made significant investments in the artificial intelligence industry, including a $10 billion investment in ChatGPT. Microsoft has generated strong financials for many years, and this year hasn’t been an exception to the rule. The company reported an 8% year-over-year revenue increase and 20% year-over-year net income growth in the fourth fiscal quarter.
Blue-Chip Stocks: Oracle (ORCL)
Oracle (NYSE:ORCL) is a hardware company that has successfully entered cloud computing. The large-cap stock presents many opportunities for investors and has rewarded patient shareholders.
Shares have increased by 50% year-to-date and have gained roughly 150% over the past five years. Oracle stock has been on the upswing as the company finds itself in a good position to capitalize on artificial intelligence. Oracle’s data scientists are creating machine learning models. Businesses can use these services to create custom learning models that can address customers’ requests. Organizations can use Oracle to create their own AI tools.
However, artificial intelligence isn’t the only catalyst for Oracle. The company reported 18% year-over-year revenue growth in the fourth fiscal quarter. Cloud revenue is the company’s largest growing segment. Fiscal Q4 cloud revenue grew by 54% year-over-year.
JPMorgan (JPM)
JPMorgan (NYSE:JPM) shares are up by 6% year-to-date and have gained 27% over the past five years. Other large banks like Bank of America (NYSE:BAC) and Citigroup(NYSE:C) are down year-to-date and over the past five years. Shares have a dividend yield close to 3%, and strong financials give investors more reasons to be optimistic. The company generated 20.6% year-over-year revenue growth and 67.3% year-over-year net income growth in the second quarter.
Plus, it has benefitted from regional bank stresses. Many regional banks have commercial mortgages that become due in 2025. The upcoming defaults can create financial pressure for smaller banks. Additional pressure can create more consolidation in the banking industry as people put their money into firms like JPMorgan.
Exxon Mobil (XOM)
Exxon Mobil (NYSE:XOM) shares have gained 8% year-to-date and are up by 40% over the past five years. Shareholders get to enjoy a 3.15% dividend yield. The company has raised its dividend for 40 consecutive years and is among the dividend aristocrats. Dividend aristocrats are a small group of stocks that have consistently raised their dividends for over 25 years.
Blue-chip investors look for stable stocks in reliable industries that offer a margin of safety. Exxon Mobil checks off those boxes and comes with a P/E ratio under 10 for new investors.
On the date of publication, Marc Guberti 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.