Top Blue Chip Stocks to Watch for Steady Returns in 2022
The stock market is a magnificent machine. Earnings season is helping to prop prices as inflation worries are being eased. But, with the Fed pulling back some of its support, can the growth continue? No worries even if growth slows, these top blue chip stocks to watch will help anchor your portfolio.
Blue chips stocks are well-established companies with a good reputation. Additionally, these types of stocks generally perform better than their peers when markets are in distress.
If you’re looking to protect your portfolio from rising rates, keep reading to find the top blue chip stocks to watch for next year.
Top Blue Chip Stocks to Watch
Although growth stocks get all the attention on the news, these companies are some of the biggest brands around us. Above all, they rose to the top of their industry and are now executing on a high level.
As a result, they can pay a part of their earnings to investors. The payout comes in the form of a dividend. You can then reinvest dividends to compound returns over the long haul. And with that in mind, your top blue chip stocks to watch.
No. 7 Coca-Cola (NYSE: KO)
- Market Cap: $244.5B
- Dividend Yield: 3.07%
- Annual Revenue: $33B
- 1 YR Return: 9%
Coca-Cola has to be included somewhere in the definition of a blue chip stock. The company continues expanding into new income opportunities. Its latest move has the company entering a market worth potentially over $14 billion by 2027 in hard seltzer.
In addition, the company is streamlining its brands, focusing on strong consumer favorites. As a result of the strategy, Coca-Cola is improving its profitability. For example, by concentrating on sparkling water during the pandemic, the company is driving 14% growth in the category.
Despite facing several obstacles this past year, Coca-Cola is increasing its dividend for the 59th straight year. The growth shows the company’s commitment to rewarding shareholders.
No. 6 Starbucks (Nasdaq: SBUX)
- Market Cap: $131B
- Dividend Yield: 1.6%
- Annual Revenue: $29B
- 1 YR Return: 23%
Starbucks is yet another household name that has a history of rewarding shareholders. As the demand for coffee grows, the largest coffee chain is changing the industry through innovation.
Though not quite as long as Coca-Cola, Starbucks is also increasing its dividend, making it 11 consecutive years. But, given Starbuck’s growth over the past year, it reflects that of a growth stock, growing 30% year-over-year (YOY).
By focusing on the customer experience, the company continues expanding its operations. In the third quarter, Starbucks opened up another 352 new stores, now totaling 33,295 stores globally.
Not only that, but the Starbucks rewards program makes it easy for customers to shop and pick up their favorites. The company’s loyalty program increased 48% YOY, with another 24.5 million users added.
No. 5 Home Depot (NYSE: HD)
- Market Cap: $393B
- Dividend Yield: 1.79%
- Annual Revenue: $132B
- 1 YR Return: 37%
Home Depot is outperforming the market right now as home improvement became a key industry during the pandemic. In fact, the home improvement market experienced its most significant YOY increase in a decade, growing over 12%.
The company’s earnings are increasing as a result of the increased demand for DIY materials. In 2020, sales reached $132 billion, growing 20% from the previous year.
On top of this, Bank of America is saying Home Depot is one of the best retailers prepared to weather the supply chain issues plaguing the industry.
With this in mind, Home Depot is a top blue chip stock to watch going into next year.
No. 4 Disney (NYSE: DIS)
- Market Cap: $290B
- Dividend Yield: N/A
- Annual Revenue: $65B
- 1 YR Return: 38%
Despite suspending its dividend in the wake of the pandemic, Disney is still one of the most well-known brands in the world. On top of this, the company’s brand power is second to none.
Additionally, Disney’s direct-to-consumer business is thriving, with around 174 million subscribers between its digital platforms. As Disney’s parks are reopening and generating revenue again, it will help boost its earnings further.
Going forward, Disney’s advantage will continue to be its brand power. And now, with a growing direct-to-consumer platform, the company can release new products directly to users. Not only that, but the increasing base of users means higher ad revenue.
No. 3 JPMorgan Chase (NYSE: JPM)
- Market Cap: $493B
- Dividend Yield: 2.40%
- Annual Revenue: $122B
- 1 YR Return: 74%
In its latest earnings, JPMorgan saw net income of $11.7 billion on revenue of $29.6 billion. Despite low-interest rates weighing on JPMs bottom line, net income still grew over 23% from 2020. The company’s resilience comes as segments such as loans and credit services saw higher demand.
Going into next year and beyond, as interest rates will rise, it’s hard to beat JPMs position in the industry.
Keep reading to discover the top blue chip stocks to watch.
No. 2 Apple (Nasdaq: AAPL)
- Market Cap: $2.08T
- Dividend Yield: 0.58%
- Annual Revenue: $365B
- 1 YR Return: 25%
When thinking of prime examples of blue chip stocks, Apple has proven itself over the past ten years, returning over 1,200% to investors.
Not only that, but Apple’s financial growth is a textbook case study in business. And on top of this, the forward-thinking company isn’t slowing down.
In Apple’s 3rd quarter, the company posted record revenue of $81.4 billion, advancing 36% YOY. Even more, the company saw double-digit growth in each geographic segment, a massive accomplishment with supply chain challenges.
Apple’s generational brand power, financial positioning, and innovative abilities make it a top blue chip stock for years to come.
Blue Chip Stocks to Watch: No. 1 Microsoft (Nasdaq: MSFT)
- Market Cap: $2.53T
- Dividend Yield: 0.67%
- Annual Revenue: $168B
- 1 YR Return: 48%
As far as blue chip stocks go, Microsoft is a classic example. The company’s overall execution is as good as it’s ever been, generating returns for shareholders.
The company’s earnings grew this past year significantly, posting 3rd quarter revenue of 45.3 billion, a 22% increase YOY. A key point to note was the Microsoft cloud segment grew 36% YOY to $20.7 billion.
As more businesses transition to the digital space, Microsoft is in the ideal position to capture a fair share of the potentially $791 billion cloud market. Not only that, but Microsoft’s diverse portfolio of business and consumer products brings it to #1 on the top blue chip stocks list.
Top Blue Chip Stocks to Watch – Looking Ahead
These are some of the top blue chip stocks to watch going into 2022 as investors are expecting macroeconomic changes. While this may be true, these companies are built to withstand adversity.
They have been tested before, and their business models have withstood the challenges. As far as investing goes, blue chip stocks are the best of the best. They have steady cash flows, solid product lineups and are becoming increasingly more profitable.
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If you are looking for steady returns, these companies above will be some of the best to keep an eye on going into next year.
About Pete Johnson
Pete Johnson is an experienced financial writer and content creator who specializes in equity research and derivatives. He has over ten years of personal investing experience. Digging through 10-K forms and finding hidden gems is his favorite pastime. When Pete isn’t researching stocks or writing, you can find him enjoying the outdoors or working up a sweat exercising.