Investing in the stock market is an excellent way to start building life-changing wealth. The path requires patience, discipline, and a long-term outlook.
If you have $2,000 and are just getting started with investing, blue chip stocks could be for you. These stocks typically represent companies that have proven track records, durable competitive advantages, and strong balance sheets that allow them to weather economic downturns.
Over time, their steady growth, consistent dividends, and compounding returns can quietly outperform short-term trades. Here are five of my favorite blue chip stocks you can add today for $2,000.
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American Express
American Express (AXP 2.28%) boasts a strong brand in the credit card industry, which attracts a premium customer base and gives it strong network effects. Unlike Visa or Mastercard, American Express operates a closed-loop network, earning fees on transactions and also earning interest income from its credit card loans.
While holding loans opens it up to credit risk, its advantage lies in its affluent customer base, which spends heavily and tends to weather economic difficulties better. As a result, American Express has stellar credit metrics that allow it to handle downturns well.
In the long term, American Express benefits from steady consumer spending, as it tends to grow in tandem with an expanding economy, but can also expand during periods of inflation. Its strong brand and network effects make American Express a resilient stock for long-term investors.
Morgan Stanley
Morgan Stanley (MS 2.25%) is an investment bank that has evolved into a diversified wealth management powerhouse.
At one time, it relied heavily on active markets for mergers and acquisitions and initial public offerings (IPOs). Today, it generates stable fee income from its $8.2 trillion in client assets. Its advantage is scale in wealth and investment management, paired with strong institutional banking operations.
The long-term thesis is that rising global wealth, particularly from high-net-worth clients, drives demand for advisory and investment services. And with its investment bank operations, these can be very good during active markets. With CEO Ted Pick citing a strong investment banking pipeline, Morgan Stanley is another solid blue chip stock to add today.
Progressive
Progressive (PGR -1.48%) is a top-notch automotive insurer with a solid market share and stellar underwriting in the highly competitive industry. Its advantage is a data-driven underwriting model that uses technology such as telematics, enabling accurate and efficient pricing.
Progressive consistently outpaces peers in policyholder growth and underwriting discipline, as seen in its impressive combined ratio.
In the long term, Progressive should continue to benefit from steady demand for auto insurance. With a strong balance sheet, stellar underwriting, and proven profitability, Progressive offers investors an excellent compounder in a traditionally "boring" industry.
Marsh & McLennan
Marsh & McLennan Companies (MMC -0.98%) also operates in the insurance industry. However, instead of underwriting insurance policies, the company provides insurance brokerage services for its customers. Brokers connect clients with insurers, designing tailored coverage based on a client's risk. The company also provides advisory services to customers, which helps diversify its revenue.
Its advantage is a global reach and client diversification across various industries, thereby reducing cyclical risk. Marsh & McLennan thrives on complexity. As risks across climate, cybersecurity, and regulation grow, demand for its advisory services strengthens. Additionally, its asset-light model yields high margins.
With strong cash generation and dividend reliability, Marsh & McLennan is another solid blue chip stock for long-term investors.
Moody's Corporation
Moody's (MCO -1.36%) plays a key role in global financial markets as a top credit ratings agency. Issuers need ratings to access capital markets. As the second-largest credit rating agency in the U.S. (behind only S&P Global), it has a strong competitive advantage in a hard-to-break-into industry, benefiting from pricing power and regulatory moats.
Beyond ratings, Moody's Analytics provides recurring revenue from risk management and financial intelligence. With global debt issuance continuing to rise, along with its high margins and competitive advantages, Moody's is a steady compounder to add today.
