One of the goals of investing should be to put your portfolio on autopilot. Fill it with quality companies and then set it and forget it. The benefit of the strategy is it removes the temptation to trade in and out of stocks.
JPMorgan Asset Management found that over the 20-year period between January 2003 and December 2022, if an investor put $10,000 into the S&P 500 and then left it alone for two decades, he would have almost $65,000 at the end.
If that same investor tried to time his entry and exit points but just missed the stock market’s 10 best days, that same investor would have less than $30,000 at the end. His portfolio would have lost over 50% of its value. It gets even worse if you miss more days.Â
At the extreme of missing the 60 best days over 20 years, you would end up with about $4,200 or a loss of some 93% of the total. That is why buy-and-hold investing is a superior strategy.
But what should you buy? While you could buy the benchmark index as in the JPMorgan study, blue-chip stocks are a good alternative. These are successful, global businesses with solid financials earning generous profits that still have good, long-term growth prospects.
Below are three top blue-chip stocks you can buy today and forget for the next two decades. You can thank me in 20 years.
Visa (V)
Leading payment processor Visa (NYSE:V) is the first blue-chip stock to buy and then forget about. A $10,000 investment in Visa stock in 2008 would be worth an astounding $207,500 today. For doing nothing more than buying shares and then developing amnesia about it.
Although shares are flat so far this year as high interest rates and elevated inflation dampen consumer spending, the prospect of the Federal Reserve cutting rates could see shares grow once again. As it makes money by charging fees on every transaction using one of its 4.3 billion branded debit and credit cards.
During Visa’s recent earnings conference call, management reiterated its full-year guidance for revenue to grow by low-double-digit rates while earnings would see low-teens growth.
Visa stock is attractive as a long-term investment. As the leader in a market valued in the trillions of dollars, it remains extremely profitable and rewards investors with a dividend that yields around 1%. Yet the payment processor has grown its payout at double-digit rates over the last five years making it a blue-chip stock to buy today.
Chevron (CVX)
Integrated oil and gas giant Chevron (NYSE:CVX) should be in your set-and-forget portfolio too. The idea that we have reached peak oil has been put to rest. Advanced drilling techniques such as horizontal drilling and hydraulic fracturing have opened up new reserves and made the U.S. one of the world’s biggest oil producers.
While renewable sources of energy will continue to expand the percentage of energy demand they meet, there remains a large, expansive market for fossil fuels. As automakers recently found out, all-electric vehicles aren’t quite as in demand as originally hoped. The industry is quickly retooling to manufacture hybrids because the reliability and availability of gasoline can’t be matched. And almost all EV charging stations are powered by fossil fuel plants, too.
Chevron has extensive upstream, midstream and downstream assets. It is focusing on its most profitable projects for exploration and production, operating a broad system of pipeline and storage facilities and offering a nationwide network of refineries and fuel stations.
Brent crude oil currently trades at $81 a barrel. Chevron, however, can remain profitable and support its dividend if the international benchmark falls as low as $50 a barrel. Even during the pandemic when the price of oil plunged to negative $37 a barrel, it maintained its payout. Lock up Chevron stock today and throw away the key.
Walmart (WMT)
Arguably the best stock to put on autopilot for your portfolio is Walmart (NYSE:WMT). The retail king was founded in 1962 and went public in 1970. Since then it has become an essential and integral part of the economy. With virtually everyone living within a few miles of one of its supercenters, Walmart remains vital to consumers’ everyday lives.
A $10,000 investment 20 years ago would be worth nearly $60,000 today. While not nearly as remarkable as Visa’s returns, remember grocery stores like Walmart operate on razor-thin margins. Net profit margins for the biggest retailer run around 2% on annual sales of $657 billion. Yet year in and year out, Walmart chugs along growing and expanding its offerings.
Online sales are now incredibly important to its growth. Last year, Walmart notched some $100 billion in e-commerce revenue making it the second-biggest online operation after Amazon (NASDAQ:AMZN).
Walmart stock is not going to see the same level of growth as other companies but it is a reliable performer through all kinds of markets. That’s just the sort of performance you want in a blue-chip stock.
On the date of publication, Rich Duprey held a LONG position in CVX stock. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
