It’s often said that patience is a virtue for investors that often means taking advantage of the stability of blue-chip stocks.
However, that virtue can be sorely lacking among investors. In good times, investors are frequently drawn to the next shiny object. And when growth is hard to come by, they can move into more speculative assets, seeking growth at all costs.
But history says investors with a long-term focus can still do better looking at solid blue-chip stocks. These stocks frequently are in defensive sectors. However, many of these companies do a pretty good job of playing both offense and defense.
That’s the case with the three stocks listed here. They all have some compelling defensive qualities, including rock-solid dividends. Each offers products and services that are generally in demand regardless of the state of the economy. And over time, each of these companies has delivered a strong total return for investors.
AbbVie (ABBV)
AbbVie (NYSE:ABBV) is one of the top blue-chip stocks for long-term investors. In the past five years, ABBV stock has grown 122.22%. Of course, that hasn’t been all in one direction, but an average gain of 24% in that time is certainly evidence of a strong stock.
Abbvie is also a dividend king that continues to add shareholder value by increasing its dividend. The yield on that dividend, as of February 28, 2024, is 3.48% and pays out $6.20 per share annually.
With blue-chip stocks like Abbvie, taking a long view is important. For the last two years, ABBV stock has been range-bound. The concern was patent expiration on its flagship drug, Humira. For biopharmaceutical companies like AbbVie, this “patent cliff” can be a real concern.
Humira remains the company’s largest source of revenue. However, the company’s recent earnings report should help alleviate those concerns. The company’s key replacements for Humira are Rinvoq and Skyrizi, which grew by 63% and 52%, respectively, and now account for greater than 25% of the company’s sales.
Since that report, ABBV stock has broken out of range and is up about 8%. Analysts have a consensus price target of around $180 on the stock. But those targets have been increasing since the earnings report and remain a consensus Buy.
Caterpillar (CAT)
Since November 2023, the Caterpillar (NYSE:CAT) chart looks very bullish, with higher highs and higher lows. The most recent push higher came after the company’s earnings report in early February which was highlighted by a 35% year-over-year gain in earnings.
The recent growth in Caterpillar’s revenue comes from infrastructure spending flowing into the economy. That will continue into 2024. At the same time, most analysts still believe the Federal Reserve will cut interest rates at least once in 2024.
While that’s not as ambitious as the five (or more) cuts investors were hoping for, it would likely be bullish for the housing market as prospective buyers are looking for any reason to pull the trigger. Seeing mortgage rates fall below 7% may do just that.
If you’re looking to buy CAT stock right now, I can understand why there could be some hesitation. But if you’re playing the long game, Caterpillar is a solid sleep-at-night stock with a history of adding to shareholder value. The dividend aristocrat has increased its dividend for 29 consecutive years. And while the yield of 1.57% may not be that impressive, investors get $5.20 per share annually for their investment.
Walmart (WMT)
Walmart (NYSE:WMT) stock is trading at $59.68 a share after the company’s recent 3-for-1 stock split on February 26, 2024. This was the eleventh WMT stock split since the company went public in 1970. The company issued the split to make the stock more attractive to Walmart employees.
However, this “employee discount” benefits long-term investors who want to get involved. The split came just about a week after Walmart announced strong quarterly earnings in which it beat on the top and bottom lines and raised its guidance.
The takeaway for long-term investors is that Walmart is a heads you win, tails you don’t lose stock. It’s the definition of a defensive stock. Consumers, particularly low-income consumers, will flock to the company for its everyday low prices. However, the company has also made significant strides to become a forceful e-commerce presence.
And like many blue-chip stocks, Walmart is a dividend king that has increased its dividend for 51 consecutive years.
On the date of publication, Chris Markoch 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.