Investing in this market isn't fun. Geopolitical tensions are escalating to levels not seen in decades, global trade relationships face unprecedented strain, and persistent inflation continues eroding purchasing power.
The silver lining? Unlike the past two and a half years, there are some truly compelling bargains in the current market. More than a few high-quality companies are trading at attractive valuations following a rough start to 2025 for U.S. stocks. Here are two blue-chip value stocks I'm steadily accumulating right now.
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A medical device leader trading at a sizable discount
Medtronic (MDT +0.91%) stock is a serious bargain at current prices. The global medical device giant trades at just 15 times forward earnings, a substantial 25% discount to the S&P 500's 20 multiple, despite maintaining market leadership positions across multiple high-growth healthcare segments.
NYSE: MDT
Key Data Points
What makes this discount particularly compelling is Medtronic's remarkable dividend track record. The company has raised its payout for 47 consecutive years, an achievement few healthcare companies can match. At the current price, investors lock in a hefty 3.2% yield, more than double the S&P 500's 1.3% yield.
The bearish narrative surrounding Medtronic centers on its moderating growth rate, but this overlooks several catalysts that could reignite momentum. As one example, the company's Affera pulsed field ablation business surged 22% last quarter, suggesting Medtronic could upend Johnson & Johnson's and Abbott's long-standing dominance in the atrial fibrillation market.
Medtronic's current 85% payout ratio might raise eyebrows, but it reflects temporary factors rather than structural problems. Management's disciplined expense control has kept earnings per share growing at 7% in the most recent quarter despite slower revenue growth, demonstrating Medtronic's ability to protect its bottom line even during challenging periods.
After years of milquetoast stock performance -- to the tune of negative-2.5% over five years -- Medtronic's deeply discounted valuation relative to the S&P 500, its generous 3.2% yield, and encouraging signs in growth segments such as Affera could finally reward patient investors as this medical device leader executes its turnaround strategy.
An energy giant trading in bargain territory
Chevron (CVX +1.49%) represents one of the most compelling values in the energy sector. The oil and gas giant trades at just 14.7 times forward earnings, nearly 27% below the S&P 500's 20 multiple, despite its dominant position in key production regions and rock-solid financial strength.
NYSE: CVX
Key Data Points
Income investors should take particular notice of Chevron's dividend excellence. The company has raised its payout for 37 consecutive years, including a 5% increase announced just this January. The oil and gas giant's current 4.1% yield provides substantial income at a reasonable 67% payout ratio, giving investors confidence in both the sustainability and future growth of its dividend.
The market's bearish stance on Chevron stems largely from concerns about long-term oil demand and recent downstream weakness. However, this ignores the company's significant cost advantages in the Permian Basin, where 75% of its acreage has low or zero royalty rates, providing superior margins compared with competitors that paid premium prices to enter the region. Management's commitment to $2 billion to $3 billion in structural cost reductions by 2026 should further enhance profitability.
What's the bottom line? For value investors seeking income and inflation protection, Chevron offers a compelling combination of current yield, an attractive valuation, and exposure to essential energy commodities that should appreciate in any sustained inflationary environment.
Why these value stocks make sense right now
In a market environment filled with uncertainty and volatility, high-quality companies like Medtronic and Chevron offer something increasingly rare: proven business models, generous income, attractive valuations, and, best of all, meaningful upside potential from current levels. That's why I continue adding to these dividend-focused positions regularly, despite the ongoing turbulence in the broader markets.
