For some reason, blue chip stocks seem to make a lot of investors roll their eyes. Maybe it is because they are boring and do not offer as much potential growth. Well, I can tell you that a portfolio of blue-chip stocks did a lot better than a portfolio of tech stocks in 2022. When times are tough, blue chip value stocks are the ones that can weather any storm. While the latest chip or SaaS company might be more alluring, it never hurts to own a couple of these foundational stocks to defend yourself against market volatility.
Costco (NASDAQ: COST)
The timing of this pick couldn’t be better as shares of Costco surged higher by more than 7% this week. The reason? Costco reported a 7% year-over-year growth in net sales during the month of December. This figure hit a staggering $22.24 billion for the month, indicating a strong holiday season for Costco. By now we’re all familiar with why Costco is such a good investment: an attractive membership model brings in a high volume of cash flow every year. People who shop at Costco tend to spend a lot with the average member spending $114.00 USD every two weeks.
On top of everything that the business offers, Costco also pays out an annualized dividend yield of 0.75% which equates to about $3.64 per share every year. It’s not quite on par with high-yield payers like Home Depot (NYSE: HD) or Walmart (NYSE: WMT), but with a dividend payout ratio of just 26.38%, Costco has plenty of room to continue to raise it in the future. No matter how bad the recession gets, I will never give up my Costco membership. That’s why it is a stock I would hold forever.
AbbVie (NYSE: ABBV)
There is a reason why I am recommending AbbVie over other pharmaceutical giants like Johnson & Johnson (NYSE: JNJ) and Merck (NYSE: MRK). In my opinion, AbbVie simply has a lot more room to grow in the future. You might recognize AbbVIe’s flagship drug Humira, which was the world’s top-selling drug aside from COVID-19 vaccines in 2022. It brings in about $20 billion annually and is one of the main reasons why AbbVie is projected to be the top-selling biotechnology company by 2028.
AbbVie managed to extend Humira’s patents to 2034 after they were set to expire in 2023. This was a major win for the company, especially as European biotech firms continue to make copycats of Humira for a cheaper price. On top of that, AbbVie is also building up two other immunologic drugs Skyrizi and Rinvoq, which many believe will bring in more than $15 billion combined as early as this year. That makes three massive drugs for AbbVie with a major pipeline of other treatments coming. If that’s not enough, AbbVie is a certified Dividend King having raised its dividend for more than 50 consecutive years, leading back to when it was a part of Abbott Laboratories (NYSE: ABT). High dividend growth and yield, a portfolio of major drugs, and a strong likelihood of future business growth, AbbVie checks all of the boxes for an incredible blue-chip investment.
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