Investing in the stock market can be a rewarding venture, but it comes with its fair share of risks and uncertainties. Investors must carefully assess market dynamics and craft a robust investment strategy. They should look for well-established companies with a history of success and a proven ability to weather economic downturns.
Hence, when it comes to long-term stability and consistent growth, market pundits place their bets on highly reputed companies with humongous market capitalization. These industry titans are commonly referred to as blue-chip companies. Blue-chip stocks are financially resilient, with an impressive track record of solid returns to shareholders.
These companies tend to be less susceptible to sudden stock price fluctuations. For income-oriented investors, blue-chip companies reward shareholders with regular dividend payouts, further enhancing stability.
These stalwarts possess a winning combination of established market positions, strong brand recognition, loyal customer bases and extensive market penetration. Such traits provide these companies with a distinct competitive edge and help unlock new opportunities, thus making them investor favorite.
By investing in blue-chip stocks, investors can build a well-diversified portfolio. Here we have identified three stocks from the Retail – Wholesale sector — Walmart Inc. WMT, The Home Depot, Inc. HD and Costco Wholesale Corporation COST. Thanks to successful business operations, these bellwethers have withstood multiple market gyrations and delivered returns to investors. These blue-chip stocks have balance sheet strength to tackle any untoward market volatility.
3 Prominent Picks
Walmart: The omnichannel retailer has been doing every bit to solidify its already robust market position. Walmart has been taking several e-commerce initiatives, including buyouts, alliances, and improved delivery and payment systems as well as undertaking efforts to enhance merchandise assortments. The company is innovating in the supply chain and adding capacity as well as building businesses, such as Walmart GoLocal, Walmart Connect, Walmart Luminate, Walmart+, Spark Delivery, Marketplace and Walmart Fulfillment Services.
With a market cap of $430.5 billion as of Jul 31, 2023, Walmart has a long-term earnings growth expectation of 5.5%. This Zacks Rank #2 (Buy) stock has a trailing four-quarter earnings surprise of 12%, on average.
The Zacks Consensus Estimate for Walmart’s current financial-year sales suggests growth of 4.2% from the year-ago period. The company pays out a quarterly dividend of 57 cents ($2.28 annualized) per share, giving a 1.4% yield at the current stock price. WMT’s payout ratio is 35, with a five-year dividend growth rate of 1.9%. (Check WMT’s dividend history here)
Home Depot: The Atlanta, GA-based company is the world’s largest home improvement specialty retailer. HD has been benefiting from ongoing investments in the One Home Depot plan. Continued strength in the Pro and DIY categories and digital momentum have been the key drivers. Its interconnected retail strategy and underlying technology infrastructure have helped boost web traffic for the past few quarters, aiding digital sales.
With a market cap of more than $335.6 billion, Home Depot has a long-term earnings growth expectation of 8.7%. This Zacks Rank #3 (Hold) stock has a trailing four-quarter earnings surprise of 1.7%, on average. The company pays out a quarterly dividend of $2.09 ($8.36 annualized) per share, giving a 2.5% yield at the current stock price. HD’s payout ratio is 51, with a five-year dividend growth rate of 14.5%.
Costco: A consumer defensive stock, Costco has been surviving the market turmoil pretty well. Strategic investments, a customer-centric approach, merchandise initiatives and an emphasis on memberships have been the discount retailer’s primary strengths. Costco’s distinctive membership business model and pricing power set it apart from traditional players.
With a market cap of $248.5 billion, Costco has a long-term earnings growth expectation of 8.3%. This Zacks Rank #3 stock has a trailing four-quarter earnings surprise of 1.8%, on average.
The Zacks Consensus Estimate for Costco’s current financial-year sales and EPS suggests growth of 6.8% and 9.7%, respectively, from the year-ago period. The company pays out a quarterly dividend of $1.02 ($4.08 annualized) per share, giving a 0.7% yield at the current stock price. COST’s payout ratio is 29, with a five-year dividend growth rate of 12%.
Walmart Inc. (WMT): Free Stock Analysis Report
The Home Depot, Inc. (HD): Free Stock Analysis Report
Costco Wholesale Corporation (COST): Free Stock Analysis Report
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