Blue-chip stocks are considered to be the most reliable stocks in the industry. Whether you are a beginner or a professional investor, there is nothing like putting your money in blue-chip stocks and holding them long-term. There’s a reason why they’re called blue-chips, they bring stability to your portfolio due to the solid business structure, stable fundamentals, and growth potential. There are several blue-chip stocks to buy and hold but I’ve picked the best three.
Ideal for low-risk investors, these three blue chips will generate steady returns over the years. There are minimal chances of losing your money in blue-chip stocks since these are well-established companies that have already proved their worth. I’ve identified three stocks that will generate steady passive income and impressive capital growth in the coming years. With that in mind, let’s take a look at them here.
Microsoft (MSFT)
A top tech stock, Microsoft (NASDAQ:MSFT) has shown steady performance over the years. A highly reliable company, the software giant has a global presence and was one of the first companies to invest in artificial intelligence through OpenAI.
This gave it an edge over competitors. Since then, it has successfully integrated AI into its products and services and is already enjoying returns. MSFT stock is up 21% year-to-date and 30% in the past 12 months. Exchanging hands for $449, the stock is on its way to $500 and has generated over 200% returns in the past five years. You will never regret owning Microsoft stock.
The largest company in the world in terms of market cap, Microsoft has consistently beaten the EPS predictions in the past four quarters. A consistent and stable performer, the stock enjoys a dividend yield of 0.78% and there is potential for a dividend hike. The company is expanding, driven by Windows and Office products. It has committed billions of dollars for AI infrastructure in Germany and Japan.
Its third-quarter results showed a 17% year-over-year jump in revenue to $62 billion with the cloud segment growing by 21%. The company is set to announce fourth-quarter results on July 30.
Microsoft recently launched the Copilot Plus PCs Surface Laptop and Surface Pro tablet. Despite competition in the space, Microsoft remains a dominant player and one of the blue-chip stocks to buy and hold. Multiple catalysts are pushing the stock higher and analysts have a price target of $502 with a buy rating.
Alphabet Inc (GOOG, GOOGL)
Another player in the AI space, Alphabet Inc (NASDAQ:GOOG, NASDAQ:GOOGL) is enjoying a strong upward rally. The stock is nearing a 52-week high and exchanging hands for $185, up 32% YTD and 48% in the past 12 months. It reported impressive first-quarter earnings driven by growth in Google Search and ad revenue. I am confident of the long-term success of the stock and consider Alphabet one of the best blue-chip stocks to buy and hold.
Alphabet is in the news for its biggest acquisition ever, the company is close to buying cybersecurity firm Wiz for $23 billion. Wiz offers cloud-based cybersecurity solutions and serves 40% of the Fortune 100 companies. Through this move, Alphabet aims to expand its cloud offering which is already grabbing market share. In the first quarter, the company saw a 28% jump in cloud revenue.
Further, the company saw a 15% revenue jump and a 57% improvement in the net income. With a market cap of $2.28 trillion, there are strong chances of the company joining the $3 trillion club in the next few years. Google Search holds the largest market share and I believe no competitor will be able to come close to it even if people start using ChatGPT for search. Additionally, if Alphabet manages to use AI to improve its search results and offerings, it could continue market domination.
The second quarter earnings will show whether Gemini has had any impact on the company’s financials. This blue-chip stock could skyrocket in the coming months and is worth holding on to for the long term. When compared to the other Magnificent Seven, it is not an expensive stock.
Eli Lilly (LLY)
Pharmaceutical company Eli Lilly (NYSE:LLY) has been a hot stock this year. Up 59% YTD, the stock is trading for $941 today and is moving closer to hitting $1,000. This also makes it a top-stock split candidate. It is also an ideal stock if you want to look beyond tech and AI.
Eli Lilly is raking in solid revenue driven by the weight-loss drugs, Zepound and Mounjaro. The obesity market is massive and Eli Lilly holds a strong share. In the first quarter, the sales of Mounjaro tripled to $1.81 billion while the sales of Zepbound hit $517 million.
Demand has exceeded the supply of Mounjaro due to which Eli Lilly is investing to grow its capacity and meet the higher demand. The company has invested $9 billion in a new manufacturing plant which is also the largest investment in the history of Eli Lilly. While the new plant will take time to begin the manufacturing process, it will certainly help the company’s revenue in the long term.
I am only expecting these numbers to grow faster in the coming quarters. Additionally, its Alzheimer’s drug also got FDA approval this month. Eli Lilly is also working on an oral pill for weight loss and has recently agreed to purchase Morphic, a company that develops treatments for chronic diseases for $3.2 billion.
I do not think that the stock has peaked and there is a lot more to come. Eli Lilly could be a great stock to add to your portfolio this year.
On the date of publication, Vandita Jadeja did not hold (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.