Investors come in all shapes and sizes. And they have all sorts of strategies to grow those portfolios. Some like day trading with penny stocks. Others like cryptos. Some dream of paydays from dividends, and others put their money in growth stocks. And then there are devotees of blue-chip stocks.
Blue-chip stocks represent companies that are among the most-known on Wall Street. They’re well-established household names, and they are among the market leaders in their field.
What else makes a blue-chip stock? Well, blue chips are financially sound. They have a dependable history of earnings, and they have market caps that range in the billions.
And often, blue-chip stocks offer reliable dividends.
Another thing to know about blue-chip stocks is that they’re seen as safer investments than small-cap stocks, cryptocurrencies or meme stocks. That means you can trust them to give you solid growth over an extended period of time. And that’s just the ticket you need to provide a solid foundation for any retirement portfolio.
Here are seven reliable blue-chip stocks to buy in 2022:
- Exxon Mobil (NYSE:XOM)
- Pfizer (NYSE:PFE)
- Broadcom (NASDAQ:AVGO)
- Prudential Financial (NYSE:PRU)
- General Dynamics (NYSE:GD)
- PepsiCo (NASDAQ:PEP)
- Toyota (NYSE:TM)
Blue-Chip Stocks to Buy: Exxon Mobil (XOM)
Market cap: $291.6 billion
Dividend yield: 5.1%
Founded in 1870, Exxon has an interesting place in American history.
Wilbur and Orville Wright famously used Exxon oil products for their first successful airplane flight in 1903. And Exxon products were used in both Charles Lindbergh and Amelia Earhart flights over the Atlantic Ocean in the 1920s.
Third-quarter earnings included revenue of $73.79 billion and earnings-per-share of $1.58. The number was Exxon’s biggest adjusted quarterly profit since 2014.
On top of that, Exxon announced it would begin a share repurchase program of up to $10 billion over the next 2 years.
Barclays analyst Jeanine Wai says that Exxon’s 8-K regulatory filing indicates that Exxon is expecting fourth-quarter earnings of $1.96 per share, which would be 14% above analysts’ expectations.
Market cap: $312.7 billion
Dividend yield: 2.8%
Pfizer is best known these days for its coronavirus vaccine, which is currently one of three that is approved for use by the Food and Drug Administration.
Pfizer made roughly $36 billion from vaccine sales in 2021. That’s nearly as much as it made for all of its products in 2020.
Certainly, vaccine sales will continue to be a revenue driver for Pfizer. Particularly as variants require that the double-dose of vaccine will require at least one booster — and in likelihood, even more after that to keep people fully protected from Covid-19.
The company got another boost in January when the Centers for Disease Control and Prevention recommended Pfizer’s Covid-19 booster for children age 12 to 15.
But it’s also important to remember that Pfizer isn’t a one-trick pony. The pharmaceutical company makes everything from Advil painkillers to Chapstick lip balm and Viagra, the erectile dysfunction drug.
Blue-Chip Stocks to Buy: Broadcom (AVGO)
Market cap: $255.6 billion
Dividend yield: 2.3%
Headquartered in San Jose, California, Broadcom is in the semiconductor business. It designs, develops, manufactures and supplies semiconductor and infrastructure products for data centers, broadband carriers, wireless carriers and networking customers.
Fourth-quarter revenue came in at $7.4 billion, which was a 15% increase from a year ago. Diluted earnings per share was $4.45.
The company said it expects to record $7.6 billion in revenue in the first quarter of 2022, which would be an increase of 14% from the first quarter of 2021.
And the company said increased its dividend by 14%, to $4.10 per share, and announced a $10 billion stock buyback program.
“Our infrastructure software growth continues to be steady with our focus on strategic customers,” CEO Hock Tan said. “With the strength and breadth of our IP portfolio, we continue to be able to uniquely deliver leading edge, best-in-class semiconductor solutions, and extend our leadership in our franchise markets.”
Piper Sandler analyst Harsh Kumar raised the firm’s price target on AVGO stock from $680 to $750.
Prudential Financial (PRU)
Market cap: $43.4 billion
Dividend yield: 4%
I know, insurance companies aren’t all that exciting. I know. I used to live in Connecticut, which is pretty much the insurance capital of the United States. We jokingly referred to it as “America’s Filing Cabinet,” which I think would make a pretty good state motto.
But if you can get excited about having a solid retirement portfolio and getting out of the rat race of working 40-plus hours a week, then PRU stock starts looking a little better.
Make that a lot better.
Prudential handles life insurance, retirement, mutual funds, annuity products and long-term disability insurance. Its reach spread beyond its New Jersey roots (where it was founded in 1875) and now operates in more than a dozen countries.
Despite a rough 2020 due to the coronavirus pandemic, PRU stock managed to bounce back in 2021. The company sold off its insurance businesses in Korea and Taiwan, as well as its record-keeping business and part of its annuity business. The transactions allowed Prudential to reinvest the proceeds into higher-growth products and increase revenue in 2021.
Third-quarter income was $1.53 billion, versus $1.487 billion in the same quarter a year ago. Earnings-per-share came in at $3.90, or 20 cents per share better than a year ago.
The company also announced a share buyback program valued at $1.5 billion.
Blue-Chip Stocks to Buy: General Dynamics (GD)
Market cap: $59.2 billion
Dividend yield: 2.2%
If you want a more exciting blue-chip stocks, then perhaps General Dynamics is for you. The Virginia-based defense contractor is involved with tanks, rockets, missiles, submarines, fighters and electronics for the U.S. military.
Defense stocks are worth considering for any portfolio because of the geopolitical realities today. North Korea continues to shoot off missile tests every now and then. The U.S. has a cold relationship with Russia, which is threatening Ukraine and now is dabbling in Kazakhstan.
I like General Dynamics because it’s heavily involved in U.S. armed forces. And it’s a key player in creating and improving the technology that American forces need to give them an edge in any conflict.
As InvestorPlace’s Louis Navellier writes, that also includes high-tech solutions like secure cloud-based comms systems, robotics and aerospace technologies.
On top of that, GD stock offers a solid dividend yield of more than 2%.
Market cap: $277.7 billion
Dividend yield: 2.4%
PepsiCo is a consumer discretionary company that’s best known for its fizzy soft drinks.
But the company is also behind several other of America’s best-known brands. They include Lay’s potato chips, Doritos snack chips, Quaker Oats and Tropicana juices.
Despite higher costs and supply chain issues in the third quarter, PEP stock managed to beat analysts’ expectations for both earnings and revenue. The company reported $20.19 billion, versus analysts’ expectations of $19.39 billion. Earnings came in at $1.79 per share versus the $1.73 per share that analysts expected.
The company revised its estimates upward for the full year, saying it expects revenue to grow by 8% instead of the 6% it previously forecast. CFO Hugh Johnston said the company has been raising prices because of supply chain problems, and it expects additional increases in the first quarter of this year.
Argus analyst John Staszak raised the firm’s price target on PEP stock from $180 to $195, saying the company is well-managed with a valuable brand portfolio.
Blue-Chip Stocks to Buy: Toyota (TM)
Market cap: $240.7 billion
Dividend yield: 3.2%
Toyota doesn’t have the high social media profile like some companies do. Its CEO doesn’t host Saturday Night Live. It didn’t have a sexy and exciting merger with a special-purpose acquisition company (SPAC) last year. And nobody in the C-suite is dabbling in space flight.
All Toyota does is make cars, trucks and SUVs. And it does a darned good job.
In fact, Toyota is the No. 1 automaker in the U.S. for the first time. Recently announced 2021 sales figures show that the Japanese company unseated General Motors (NYSE:GM) in selling the most vehicles in the U.S. last year.
The company sold 2.33 million vehicles in the U.S. last year, which was an increase of 10.4% from a year ago.
And because it’s doing things the right way, Toyota is also making headway in the lucrative electric vehicle space. In October it announced a $3.4 billion investment in battery development and production in the United States. The project includes a $1.3 billion EV battery plant that is scheduled to open in 2025.
On the date of publication, Patrick Sanders 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.
Patrick Sanders is a freelance writer and editor in Maryland, and from 2015 to 2019 was head of the investment advice section at U.S. News & World Report. Follow him on Twitter at @1patricksanders.