August represents a great opportunity for investors to take advantage of the best blue-chip stocks to buy. With the stock market falling hard, a more balanced investing approach can help weather the storm.
Blue-chip stocks are great stock picks in any macroeconomic environment, but are especially great in times of uncertainty. They are large cap, well-established companies that have strong track records of success. This often pertains to their stable cash flow, earnings and strong balance sheets.
In addition, the companies often have a history of rewarding their shareholders through dividend payments. Investors that prioritize income over growth will find this aspect particularly appealing. In some cases, you won’t have to sacrifice one for another, allowing you to enjoy the benefits of both.
Now, here are the three best blue-chip stocks to buy in August 2024.
Visa (V)
Visa (NYSE:V) is undoubtedly one of the top blue-chip stocks to buy in August. The company’s robust business model, strong brand recognition and impressive dividend growth make it a noteworthy candidate for long term investors.
Visa has repeatedly proven its ability to thrive in various macroeconomic environments. Prior to the global economy being crushed by inflation and higher interest rates in 2022, Visa’s growth was nothing to sneeze at. Its revenue and earnings were growing in the high double digits, while maintaining strong operating margins and free cash flow.
Comparatively, these metrics are now substantially higher than pre-pandemic levels. Tailwinds in cross-border transaction volume and an expanded partnership network remain key business drivers.
After starting off 2024 on a strong note, its third-quarter results showed signs of acceleration. In Q3 FY24, revenue increased 10% year over year to $8.9 billion. Additionally, net earnings swelled 17% year over year to $4.9 billion, or $2.40 per share. With an 18% compound annual growth rate (CAGR) in its dividend per share, Visa is a quintessential blue-chip company worth buying and holding for the long term.
Linde (LIN)
Linde (NYSE:LIN), the largest industrial gas company in the world, stands as one of the best blue-chip stocks to buy now. Its ability to maintain strong margins and earnings in various economic climates is a testament to its growth and resilience.
Linde is a juggernaut in the industrial gas and clean energy sector. Following its merger with Praxair in 2018, earnings growth has continued accelerating. Profit margins also expanded despite operating in a more challenging macroeconomic environment over the last few years. However, this hasn’t stopped the company from making strategic investments in the green energy revolution.
Linde is particularly focused on the hydrogen infrastructure market, a segment that offers significant EBITDA and cash flow potential. In its latest quarterly results, revenue rose a modest 1% year-over-year to $8.3 billion. Earnings per share increased 8% year-over-year to $3.44 per share, with operating margin up 140 basis points to 29.3%. The company expects full-year adjusted EPS in the $15.40 to $15.60 range, representing approximately 9% to 11% growth.
Canadian National Railway (CNI)
Canadian National Railway (NYSE:CNI) is the final company on the list that is a great blue-chip pick for August 2024. The company’s recession-resistant business model and conservative earnings growth outlook make it a great long term investment for the more risk-averse investor.
Canadian National Railway’s 10% decline in share price could represent an opportunity for long-term investors in August. The company has remained resilient in 2024, and more loose financial conditions are a positive backdrop for the business. However, ongoing uncertainty in the labor market will be important to watch as the Federal Reserve looks to reduce policy restrictions.
In the last year, CEO Tracy Robinson has done an exceptional job of maintaining strong earnings growth amidst declining freight volume and higher interest rates. In FY23, earnings per share increased 15% year over year despite the company’s revenue slump and increased economic uncertainty. Yet the outlook for 2024 remained intact after CN reported 7% quarterly revenue growth in the second quarter. Assuming all things run smoothly from here, it maintains a target of 10% to 15% EPS growth through 2026.
On the date of publication, Terel Miles 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.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
