Global macroeconomic challenges, interest rate hikes and inflation caused major volatility in the U.S. stock markets for most of 2023. Central banks all over the world have increased their interest rates this year to tackle inflation.

Also, the failure of financial institutions such as the Silicon Valley Bank sparked concerns among investors. However, the markets have started improving of late, as exemplified by the Dow Jones Industrial Average Index’s (DJIA) recent crossing of the 37,000 mark on Dec 13.

DJIA rallied amid indications that the Federal Reserve will cut interest rates several times next year. The Fed also kept interest rates unchanged at a range of 5.25-5.5% in its last policy meeting, indicating easing inflationary pressures. The Dow has moved north 16.8% year to date.

The tech-heavy Nasdaq 100 and S&P 500 have increased 53.2% and 23.6%, respectively, in the year-to-date period.

The Dow Jones equity index consists of 30 of the United State’s most influential and valuable companies, which are also known as blue-chip companies. Adding these stocks to one’s portfolio amid a volatile market scenario is considered to be a safe investment bet.

Blue-chip stocks are usually resilient to market volatility. These companies generally have a huge market cap, solid cash flows, a healthy balance sheet and, in most cases, a stable dividend policy. These blue-chip stocks have a market capital in excess of $50 billion, a solid Zacks Industry Rank and are placed within the top 50% of more than 250 Zacks industries.

We have shortlisted three such stocks with solid upside potential based on dividend history, future growth prospects, valuation and financial health that are likely to be healthy investment options in 2024.

3 Top Picks

The Procter & Gamble Company (PG Quick QuotePG - Free Report) : Headquartered in Cincinnati, OH, Procter & Gamble is a branded consumer products company that markets its products in more than 180 countries, primarily through mass merchandisers, grocery stores, membership club stores, drug stores and department stores. It has operations in approximately 70 countries.

PG operates in the consumer stable industry, which was highly resilient amid market turmoil like the pandemic, rising macroeconomic uncertainty and increasing geopolitical tensions like the Russia-Ukraine war and Israel-Hamas conflict.

Procter & Gamble provided a bullish view for fiscal 2024. It anticipates year-over-year all-in sales growth of 2-4% for fiscal 2024. Organic sales are likely to increase 4-5% while reported EPS is expected to increase 6-9% year over year to $6.25-$6.43.

PG witnessed earnings growth of 6.9% in the past five years, higher than the industry’s average of 0.8%. The stock has an impressive long-term EPS growth rate of 7.5%. It also boasts an impressive earnings surprise history. The company’s earnings outpaced estimates in each of the trailing four quarters, delivering an average surprise of 3.8%.

Procter & Gamble’s current dividend yield is 2.61%. It has an annualized 5-year dividend growth rate of 6.52%.  It has a VGM Score of B. It also has a Zacks Industry Rank #91 (top 36%).

The Coca-Cola Company (KO Quick QuoteKO - Free Report) : Atlanta, GA-based Coca-Cola is a leading beverage company with solid branding and marketing initiatives that have helped it garner a market share of more than 40% in the non-alcoholic beverage industry. KO’s portfolio includes more than 4,700 beverage products (and more than 500 brands), ranging from sodas to energy drinks.

Coca-Cola rapidly adapts to dynamic consumer demand and choices. It has reacted to the overall decline in soda sales over the years by going on a purchasing spree and investing in healthier substitutes like coffee, sparkling water and sports drinks.

KO witnessed earnings growth of 4.7% in the past five years, higher than the industry’s average of 2.4%. The stock has an impressive long-term EPS growth rate of 6.2%. KO boasts an impressive earnings surprise history. The company’s earnings outpaced estimates in each of the trailing four quarters, delivering an average surprise of 5.1%.

Coca-Cola’s current dividend yield is 3.17%. It has an annualized 5-year dividend growth rate of 3.43%. It also has a Zacks Industry Rank #20 (top 8%).

International Business Machines Corporation (IBM Quick QuoteIBM - Free Report) : Armonk, NY-based, IBM has gradually evolved as a provider of cloud and data platforms. Red Hat’s acquisition, in particular, has helped IBM in strengthening its competitive position in the hybrid cloud market.

International Business Machines is well positioned to benefit from strong demand for hybrid cloud and AI, driving growth in the Software and Consulting segments. The company's focus on developing next-generation AI-powered technology will likely drive the top line.

The stock has an impressive long-term EPS growth rate of 3.9%. IBM boasts an impressive earnings surprise history. It delivered an average earnings surprise of 4.9% in the last four quarters. The company’s current dividend yield is 4.13%. It also has a Zacks Industry Rank #91 (top 36%).