It’s understandable if you have whiplash from market moves this year. We’ve seen stocks surge, fall and surge again on the heels of the current Santa rally. But, though investors are flocking to small-caps and growth stocks, blue-chip stocks might be the best bet for your portfolio.
We aren’t out of the woods economically. Not by a long shot. And it’ll just take one bad catalyst to push speculative stocks back into the gutter. To that end, you should be looking for opportunities to snag undervalued stocks that represent stability and maturity. In other words, you’re looking at these three blue-chip stocks to buy as the best bet to position yourself for a solid 2024.
AT&T (NYSE:T) is the quintessential blue-chip stock. Though the company dipped this summer on the heels of the lead shielding debacle, shares are rebounding as the issue appears far less serious than initially thought. In the meantime, shares remain undervalued at about 10% below their early-2023 pricing, meaning there’s still time to ride the blue-chip stock back to the top.
Though blue-chip stocks in general, and utilities specifically, usually lack innovation that growth stocks exhibit, AT&T stands in stark contrast. This week, the company announced a new network expansion to save money and improve user experience. The emerging tech will service 70% of AT&T’s U.S. wireless traffic by 2026. Willingness to expand is a hallmark of stable blue-chip stocks, as many are often rewarded for playing it safe. But AT&T is willing to go out on a limb, as also evidenced by its recent partnership with AST SpaceMobile (NASDAQ:ASTS) to explore low-earth satellite communications.
Of course, another hallmark of blue-chip stocks is their dividend yield, and AT&T meets this mark and then some. Its current dividend yield is 6.62%, combined with a 55% payout ratio, which means stability and income opportunity for investors.
It’s hard to beat tech or healthcare stocks if you invest for the long haul. Luckily, Medtronic (NYSE:MDT) combines both with a blue-chip sensibility that’s hard to beat. The company posted a few rocky quarters amid the pandemic.
The poor performance mostly came from slowed elective and non-emergent surgery rates, but as that front stabilizes, Medtronic is posting a rapid turnaround. Its most recent earnings report saw Medtronic’s revenue climb 5% year-over-year, and management pushed its annual forecast higher.
Medtronic stands at a unique intersection between healthcare (an ever-growing industry) and tech. The company is collaborating with Nvidia (NASDAQ:NVDA), for example, to develop next-gen, AI-enabled diagnostic tools. Like AT&T, this willingness to innovate bodes well for Medtronic’s future while it retains blue-chip maturity and status.
Medtronic offers a 3.66% total yield, and shares remain undervalued by nearly every measure despite a recent resurgence.
RTX (NYSE:RTX) is another blue-chip winner that saw some turbulence before mounting a comeback in recent months. Shares remain 17% down year-to-date but have bounced more than 15% since October, indicating its current run still has legs.
The company’s recent earnings sparked renewed enthusiasm as management reported expectation-beating top and bottom line numbers. The firm also announced a massive $10 billion buyback program that gave shareholders much to be happy about alongside the current 2.82% dividend yield.
The company seems to be beyond past troubles with engine coating contamination. The firm did a whirlwind global tour to examine, diagnose, and repair airplane engine issues resulting from the contamination. Investors rightfully feared that costs could spiral out of control if the issue proved more prevalent than initially thought.
But, in the recent call, company management assured investors there wouldn’t be unforeseen expenses. CEO Greg Hayes told investors, “We have made significant progress on our assessment of the Pratt & Whitney powder metal manufacturing matter and expect the financial impact to be in line with the previously disclosed charge.” This means there won’t be as much uncertainty surrounding RTX’s prospects, boding well for this blue-chip stock.
On the date of publication, Jeremy Flint held no positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.