If you're looking to build wealth, investing in the stock market is an excellent place to start. But with literally thousands of stocks to choose from, where does one start? One type of stock to consider is blue-chip stocks. These are companies that are industry leaders with proven business models and a long history of operating across the various economic and business cycles.
These companies tend to have strong balance sheets and sound business models, helping these stocks deliver stellar returns over time. One key advantage is that they generate steady cash flow, which can fund dividends, share buybacks, acquisitions, or other investments that help support long-term growth.
Another benefit is that these companies can be a pillar of stability in your portfolio, because they tend to experience less volatility than more speculative ventures. If this appeals to you and you have $10,000 in cash you're looking to invest, here are five top-notch blue-chip stocks to buy today.
Image source: Getty Images.
The largest bank in the United States
JPMorgan Chase (JPM 1.96%) is the largest bank in the United States and a premier blue-chip stock. The bank boasts a massive balance sheet with over $3.8 trillion in assets under management worldwide. This large asset base provides it with advantages of scale, including a low-cost funding source and a fortress balance sheet that allows it to weather economic downturns better than its peers.
NYSE: JPM
Key Data Points
With CEO Jamie Dimon at the helm, JPMorgan Chase has navigated various business and economic environments. Most recently, the bank stood out among its peers during the Federal Reserve's interest rate hiking cycle from 2022 to 2023. Not only did the bank benefit from higher interest income, but its fortress balance sheet also enabled it to scoop up First Republic Bank's assets when many other banks struggled.
The world's largest asset manager
BlackRock (BLK 2.91%) is the world's largest asset manager with over $13.5 trillion in assets under management (AUM). This scale provides BlackRock with a huge source of recurring revenue, as it earns a percentage of fees based on total AUM.
The investment firm's strength lies in its exchange-traded fund (ETF) products, which are offered through its iShares brand. BlackRock is one of the world's largest ETF providers because it offers investors targeted exposure across industries, sectors, themes, and other investment considerations.
The growth of passive investing has been aided by BlackRock's expanding product lineup, which generates stable revenue and free cash flow, allowing the firm to reinvest in the business or reward shareholders with a growing dividend, which it has done for 16 consecutive years.
An essential player in global credit markets
Moody's (MCO 3.49%) is a key player in global financial markets due to its role in the credit rating industry. When corporations and governments issue debt or other structured debt products, they require a credit rating to access global markets and appeal to institutional investors, such as banks and pension funds.
NYSE: MCO
Key Data Points
What makes Moody's compelling is the high barriers to entry for the credit rating industry. It takes decades to build up expertise and, more importantly, the trust of market participants. Not only that, but regulatory burdens are high, and today Moody's and S&P Global dominate the credit rating industry, collectively holding an 80% market share.
With stellar profit margins and a strong position in a hard-to-break-into industry, Moody's is another solid blue-chip stock to consider today.
Two top-notch insurance companies
When it comes to blue-chip stocks, insurance companies can be quite appealing due to their steady premium income and investment returns. Two property and casualty insurance companies with an excellent track record of underwriting profitability are Progressive (PGR +0.98%) and Chubb (CB +1.92%).
NYSE: PGR
Key Data Points
Both companies operate in the insurance space, but not necessarily in the same space. Progressive primarily writes personal auto insurance policies and is the second-largest auto insurer in the U.S. Meanwhile, Chubb underwrites commercial insurance across a wide range of products, including general liability, cyber risk, accident, health, and specialty insurance.
Chubb consistently pays a dividend, which it has increased every year for the past 32 years. On the other hand, Progressive rewards investors with a special dividend during years of strong growth. The company recently declared a special dividend of $13.50, or a 5.8% yield based on its most recent closing price.
