10 Best Blue-Chip Stocks to Buy for the Long Term

Investors often hold blue-chip stocks at the core of their portfolios. That makes sense: After all, blue-chip companies are leaders in their industries. Their names are familiar to investors.

What Are Blue-Chip Stocks?

Blue-chip stocks are from companies that are large, well-established, and financially sound. These companies have strong brand names and reputations, and they generate dependable earnings. Blue-chip companies usually boast consistent dividends and are often considered to be less risky, given their financial stability.

However, investors may differ in how they define blue-chip companies. Some investors demand that a blue-chip stock be included in a particular index, such as the Dow Jones Industrial Average. Others may only include dividend-paying companies on their lists of blue-chip stocks. Still others may have specific market-capitalization thresholds for blue-chip companies.

The companies on Morningstar’s list of the best blue-chip stocks to buy for the long term share a few qualities:

• The stocks are from companies included on Morningstar’s list of the Best Companies to Own for 2024. Companies on this list have wide Morningstar Economic Moat Ratings and predictable cash flows, and they are run by management teams that make smart capital-allocation decisions.
• These stocks look undervalued, which means they’re trading below Morningstar’s fair value estimates.
• Their market capitalizations top $100 billion.

10 Best Blue-Chip Stocks to Buy for the Long Term—January 2024

These are the largest firms by market capitalization on Morningstar’s Best Companies to Own list whose stocks were at least 10% undervalued as of Jan. 22, 2024.

1. Roche RHHBY
2. Pfizer PFE
3. Anheuser-Busch InBev BUD
4. Comcast CMCSA
5. Nike NKE
6. Taiwan Semiconductor Manufacturing TSM
7. RTX RTX
8. Medtronic MDT
9. Bristol-Myers Squibb BMY
10. Sanofi SNY

Here’s a little bit about each of these blue-chip stocks for the long term. Data is as of Jan. 22, 2024.

Roche

• Market Capitalization: $230 billion
• Morningstar Price/Fair Value: 0.60
• Morningstar Style Box: Large Blend
• Trailing 12-Month Yield: 3.60%
• Morningstar Capital Allocation Rating: Exemplary
• Industry: Drug Manufacturers—General

The largest drugmaker and most undervalued name on our list of the best blue-chip stocks to buy, Roche stock trades 40% below our fair value estimate of $59. The company’s drug portfolio and industry-leading diagnostics provide significant competitive advantages and underpin our wide economic moat rating, says Morningstar strategist Karen Andersen. “This Swiss healthcare giant is in a unique position to guide healthcare into a safer, more personalized, and more cost-effective endeavor,” she notes. With its biologics focus and innovative pipeline, we expect Roche to continue to achieve growth as its blockbusters face competition.

Pfizer

• Market Capitalization: $160 billion
• Morningstar Price/Fair Value: 0.67
• Morningstar Style Box: Large Value
• Trailing 12-Month Yield: 5.79%
• Morningstar Capital Allocation Rating: Standard
• Industry: Drug Manufacturers—General

Pfizer stock offers the highest trailing yield among our list of the best blue-chip stocks to buy for the long term. We don’t think the market fully appreciates the pharmaceutical giant’s ability to offset major patent losses over the next five years, argues Morningstar director Damien Conover. We’re most bullish on several recent launches, including cardiovascular drug Vyndaqel, Conover says. Pfizer provided 2024 guidance that acknowledged the firm would be unlikely to hit the previous 6% growth-rate guidance from 2020 to 2025 (excluding COVID-19 products sales). Despite the falling outlook, management reiterated support for the dividend, which we believe is secure and will likely support the stock valuation. We think Pfizer stock is worth $42 per share; the stock currently trades 33% below that.

Anheuser-Busch InBev

• Market Capitalization: $124 billion
• Morningstar Price/Fair Value: 0.70
• Morningstar Style Box: Large Blend
• Trailing 12-Month Yield: 1.31%
• Morningstar Capital Allocation Rating: Exemplary
• Industry: Beverages—Brewers

The only brewer on our list of the top blue-chip companies to buy, Anheuser-Busch InBev stock trades 30% below our fair value estimate of $90. The firm has built a vast global scale and regional density through past acquisitions like Grupo Modelo and SABMiller. AB InBev has a history of buying brands with promising growth platforms and then expanding distribution while squeezing costs from the businesses, which contributes to its Morningstar Capital Allocation Rating of Exemplary. The brewer’s second-quarter 2023 performance in the United States was disastrous: The boycott around the marketing of Bud Light in the U.S. led to a loss in market share. There was more optimism in the third quarter, however, as management noted that Bud Light’s market share hadn’t worsened since April, reports Morningstar strategist Philip Gorham. We think there’s plenty of upside with the stock for patient investors.

Comcast

• Market Capitalization: $175 billion
• Morningstar Price/Fair Value: 0.73
• Morningstar Style Box: Large Value
• Trailing 12-Month Yield: 2.66%
• Morningstar Capital Allocation Rating: Standard
• Industry: Telecom Services

Trading 27% below our fair value estimate of $60, Comcast is the only telecom stock on our list of blue-chip stocks to buy. Growth in Comcast’s cable business has slowed, and we expect it to continue to slow as more customers access fiber and wireless network alternatives. We nevertheless think Comcast will be able to limit broadband share losses in the coming years while enjoying solid pricing power, says Morningstar director Mike Hodel. NBCUniversal isn’t as well positioned, but we like the idea of expanding the theme park business around key content franchises, he adds. A solid balance sheet has allowed Comcast to aggressively repurchase shares and pay decent dividends.

Nike

• Market Capitalization: $152 billion
• Morningstar Price/Fair Value: 0.74
• Morningstar Style Box: Large Blend
• Trailing 12-Month Yield: 1.38%
• Morningstar Capital Allocation Rating: Exemplary
• Industry: Footwear & Accessories

Nike, the largest athletic footwear brand in all major categories and in all major markets, dominates categories like running and basketball with popular shoe styles. We view Nike as the leader of the athletic apparel market and believe it will overcome current challenges, such as uneven demand for sportswear in key markets, argues Morningstar senior analyst David Swartz. Nike’s consumer plan is led by its Triple Double strategy to double innovation, speed, and direct connections to consumers. The plan includes cutting product creation times in half, increasing membership in Nike’s mobile apps, and improving the selection of key franchises while reducing its styles by 25%. Nike stock trades at a 26% discount to our fair value estimate of $136.

Taiwan Semiconductor Manufacturing

• Market Capitalization: $517 billion
• Morningstar Price/Fair Value: 0.75
• Morningstar Style Box: Large Blend
• Trailing 12-Month Yield: 1.60%
• Morningstar Capital Allocation Rating: Exemplary
• Industry: Semiconductors

The world’s largest dedicated contract chip manufacturer, Taiwan Semiconductor Manufacturing should be a significant beneficiary in high-performance computing with additional upside potential from generative artificial intelligence, says Morningstar analyst Phelix Lee. Management provided a better full-year 2024 outlook than we foresaw, thanks to strong artificial-intelligence-related growth and lowered 2024 capital expenditure budget, Lee adds. He also notes that TSMC has generated more-stable earnings than many of its peers, which has led to more consistent (and growing) dividends over time. Taiwan Semiconductor’s stock trades 25% below our fair value estimate of $151.

RTX

• Market Capitalization: $122 billion
• Morningstar Price/Fair Value: 0.76
• Morningstar Style Box: Large Value
• Trailing 12-Month Yield: 2.73%
• Morningstar Capital Allocation Rating: Exemplary
• Industry: Aerospace & Defense

RTX is an aerospace and defense company with roughly equal exposure to both segments. RTX’s businesses include Collins’ aerospace componentry and subassemblies, Pratt & Whitney’s engines, and Raytheon’s missiles, sensors, and communications offerings. Despite a large recall of commercial airplane engines in 2023, we think the company can weather the financial impact thanks to its profitable and growing business, says Morningstar analyst Nic Owens. RTX stock is trading at a 24% discount to our fair value estimate of $112 per share.

Medtronic

• Market Capitalization: $115 billion
• Morningstar Price/Fair Value: 0.77
• Morningstar Style Box: Large Value
• Trailing 12-Month Yield: 3.18%
• Morningstar Capital Allocation Rating: Standard
• Industry: Medical Devices

Medtronic stock looks undervalued to us, trading 23% below our fair value estimate. One of the largest medical-device companies, Medtronic maintains a diversified product portfolio targeting a wide range of chronic diseases. With its expansive selection of products for acute care in hospitals, Medtronic is a key partner for its hospital customers, says Morningstar senior analyst Debbie Wang. We think Medtronic stock is worth $112 per share.

Bristol-Myers Squibb

• Market Capitalization: $101 billion
• Morningstar Price/Fair Value: 0.79
• Morningstar Style Box: Large Value
• Trailing 12-Month Yield: 4.66%
• Morningstar Capital Allocation Rating: Exemplary
• Industry: Drug Manufacturers—General

Bristol-Myers Squibb, trading at a 21% discount, is the third drugmaker on our list of blue-chip stocks to buy for the long term. The firm discovers, develops, and markets drugs for various therapeutic areas, such as cardiovascular, cancer, and immune disorders. A key focus for Bristol is immuno-oncology, where the firm is a leader in drug development. While we believe Bristol’s internal pipeline is solid and helps reinforce the firm’s wide moat, we also believe the company needs acquisitions to address the major patent expirations like cardiovascular drug Eliquis, says Morningstar’s Conover. We think the stock is worth $63 per share.

Sanofi

• Market Capitalization: $128 billion
• Morningstar Price/Fair Value: 0.83
• Morningstar Style Box: Large Blend
• Trailing 12-Month Yield: 3.74%
• Morningstar Capital Allocation Rating: Standard
• Industry: Drug Manufacturers—General

Drugmaker Sanofi rounds out our list of the best blue-chip stocks to buy for the long term. The firm’s wide lineup of branded drugs and vaccines and robust pipeline create strong cash flows and a wide economic moat. Growth of existing products and new product launches should help offset upcoming patent losses, says Morningstar’s Conover. Sanofi’s existing product line boasts several top-tier drugs, including immunology drug Dupixent. A history of acquisitions and robust cash flow from operations mean Sanofi could take advantage of further growth opportunities through external collaborations. We expect the firm’s acquisition focus on immunology drugs and rare disease drugs will continue following several deals in this area. Sanofi stock trades 17% below our fair value estimate of $61.

What Are the Morningstar Fair Value Estimate, Style Box, and Capital Allocation Rating?

The Morningstar fair value estimate represents what Morningstar analysts think a particular stock is worth. Fair value estimates are rooted in the fundamentals and based on how much cash we think a company can generate in the future, not on fleeting metrics such as recent earnings or current stock price momentum.

The Morningstar Style Box, meanwhile, is a nine-square grid that provides a graphical representation of the investment style of stocks, bonds, or funds. Based on a series of inputs—including a company’s historical and long-term projected growth and its historical and forward-looking price multiples—a stock is classified as either a value stock, a growth stock, or a core stock. A stock is also classified as either small-cap, mid-cap, or large-cap based on its market capitalization.

Lastly, the Morningstar Capital Allocation Rating is an assessment of how well a company manages its balance sheet investments and shareholders’ distributions. Analysts assign each company one of three ratings—Exemplary, Standard, or Poor—based on their assessments of how well a management team provides shareholder returns.

How to Find More Blue-Chip Companies to Invest In

Of course, there are many other criteria that investors can use to find blue-chip stocks to buy for the long term. Here are some tools that investors can use to find more blue-chip companies to research further:

• Investors can review Morningstar’s lists of large-cap value stocks, large-cap core stocks, and large-cap growth stocks. The lists aren’t restricted by quality or valuation; rather, they’re complete lists of the large-cap stocks in Morningstar’s database and broadly represent a starting point for finding blue-chip companies.
• Investors can use the Morningstar Investor screener to create their own list of blue-chip stocks that meet their specific criteria. Set the Investment Type to stocks, and then choose what market capitalization threshold you’d like in the Criteria section. You can then refine your search for blue-chip stocks even further by adding valuation, profitability, and/or dividend requirements. You can also screen your list of blue-chip stocks by Morningstar Rating or economic moat.
• Investors who’d rather invest in blue-chip companies through a managed product like an exchange-traded fund or a mutual fund can also use the Morningstar Investor screener. For Investment Type, choose either mutual fund or ETF. In Search Securities, type in the keyword “blue chip.” Some highly rated funds and ETFs focused on blue-chip stocks include Fidelity Blue Chip Growth FBGRX and T. Rowe Price Blue Chip Growth ETF TCHP. Just remember: large-company funds and broad U.S. stock index funds own blue-chip stocks; you may not necessarily need a separate blue-chip fund if you already own a core stock fund.