In uncertain times, many investors want to focus on stable, dependable companies. Blue-chip stocks give those investors exactly what they’re looking for. These are established companies with some of the largest market caps. In fact, most blue chip companies are either the leader in their sector, or are at least in the top three.
These companies have a long history of being financially stable, with the ability to produce strong earnings. Many blue-chip stocks pay out regular dividends, and some of them are even dividend aristocrats, meaning they have increased their dividend for at least 25 consecutive years.
The one thing blue-chip stocks sometimes lack is the capital growth of some small-cap stocks. This makes sense. These are mature companies who are not done growing, but make a choice to return a part of their profit to their shareholders.
But every year, there are some blue chip stocks that outperform their segment, and in some cases they outperform the leading indexes (like the S&P 500). When that happens, investors can enjoy both capital appreciation and a regular dividend. There are several stocks that meet these criteria right now, and that’s the focus of this presentation.
So without further explanation, let’s take a look at three blue-chip stocks that are currently outperforming the S&P 500.
Blue-Chip Stocks to Buy: Home Depot (HD)
Dividend Yield: 2.3%
Year-to-Date gain: 37%
Retail can be a tough sector, but Home Depot (NYSE:HD) is not a one-year wonder. With the exception of a couple of dips in 2018 that mirrored the broader market, the long-term trend has been up. The stock has nearly doubled in three years. But the larger question is what has the stock done lately?
HD stock is up about 2% for the month, and in the past quarter, the stock has gained 8.7%. The S&P 500 has moved 0.7% in that same time. The stock is also trading ahead of its 20-day trading volume, which indicates that the bulls are expressing interest before the company releases earnings. The company is scheduled to release earnings on Nov. 19.
Home Depot is not behaving like a traditional brick-and-mortar company. In fact, you could say they’re acting downright nimble. The word omni-channel gets thrown around a lot, but that’s what the company is creating. Customers can shop online while they’re in the store. And they can use the website to order products that they can pick up at their local store.
United Technologies (UTX)
Dividend Yield: 2.1%
Year-to-Date Gain: 34%
United Technologies (NYSE:UTX) shares are up over 30% for the year. That includes a nearly 10% jump from the beginning of the month when the stock was lagging behind the aerospace sector. Now, it’s roughly on pace.
One reason for this is a buy recommendation from Credit Suisse analyst Robert Spingarn who recommended investors snap up shares of the stock before it concludes deals in mid-2020. UTX aerospace division will merge with Raytheon (NYSE:RTN) after the latter spins out its air conditioning and elevator units. The deal is pending approval from Raytheon shareholders.
The recommendation seems to be pushing the stock past the “deal limbo” that was forming over the stock. In its latest earnings report, it was clear that the company’s aerospace division is outperforming the rest of the company. The company says full-year sales will be in a range of $76 billion to $76.5 billion. Free cash flow (FCF) is expected to grow to between $5.3 billion and $5.7 billion. The company is projecting a $1 billion reduction in portfolio separation costs.
Apple (AAPL)
Dividend Yield: 1.2%
Year-to-Date Gain: 57%
For Apple (NASDAQ:AAPL), it’s still all about the iPhone. The company is seeing stronger-than-expected sales of its iPhone 11 series. Apple recently announced that it would be increasing production for the iPhone. In addition to strong U.S. sales, the iPhone 11 also saw strong preorders in China. Perhaps reflecting the difference in the country’s respective customer bases, the base iPhone 11 is a stronger seller in China. The high-end iPhone 11 Pro is the leading seller in the U.S.
The success of the 11 series is encouraging news, particularly since 2020 will bring the launch of the company’s first 5G iPhones. The conventional wisdom was that consumers would wait until 2020 to get an upgrade. But strong promotional activity is helping boost sales.
Investors were also awaiting news on Apple’s Apple TV+. Apple is keeping the monthly price of their subscription streaming service at an industry-low $4.99. However, the company will not have a library of existing content and will be relying — initially — on nine original shows to generate interest in the service.
As of this writing, Chris Markoch did not hold a position in any of the aforementioned securities.
