The concept of buy and hold may seem out of fashion given the state of the market in 2023. But if the threat of higher interest rates hasn’t sent you to the sidelines, blue-chip stocks offer an opportunity to get a total return that can beat inflation. Today, we’ll look at seven of the best blue-chip stocks to buy this month. 

Blue-chip stocks are defined as companies that have reliable business models and a history of delivering long-term total returns for shareholders. One characteristic that helps blue-chip stocks deliver solid total returns is a safe and growing dividend. This gives you a reliable source of income whether the stock price is up or down.  

In a raging bull market fueled by effectively 0% interest rates and quantitative easing, it’s hardly a stock picker’s market. But when the market begins to correct, it’s a different story. That’s when investors must be more selective. And when investors look for quality in bear markets, blue-chip stocks like the ones below rise to the top.  

KR	Kroger	$47.10
JNJ	Johnson & Johnson	$151.61
JPM	JPMorgan Chase	$133.65
MCD	McDonald’s	$262.03
LMT	Lockheed Martin	$475.50
CAT	Caterpillar	$227.01
AXP	American Express	$165.70

Kroger (KR)
 

Leading off the list of blue-chip stocks to buy in March is Kroger (NYSE:KR). While consumers are reining in discretionary spending to offset rising inflation, they still need to buy groceries. As I wrote recently, Kroger has a boring business model at a time when boring is beautiful.  

Kroger reported fourth-quarter and full-year earnings on March 2, beating analyst estimates on both the top and bottom lines and delivering a better-than-expected profit outlook for 2023. The latest earnings beat marked 13 consecutive quarters that the grocery chain operator has exceeded EPS expectations.  

For the full year, revenue jumped 8% to $148.3 billion, while adjusted earnings of $4.23 per share were up 15% from 2021. Same-store sales increased by 5.6% in 2022. Thus, the grocery chain appears to be benefitting from inflation and passing along some of its higher input costs to consumers.

While earnings growth is expected to slow this year to around 6%, the company is likely to continue to increase its dividend, which it has done in each of the past 16 years. Currently, Kroger pays a quarterly dividend of 26 cents a share for a yield of 2.2%. 

Johnson & Johnson (JNJ) 

Consumer staples stocks offer defensive plays in times of volatility, as the underlying companies make products that consumers can’t, or won’t, do without. Chances are, if you go through your bathroom, you’ll find one or more products made by Johnson & Johnson (NYSE:JNJ). As long as inflation stays near a 40-year high, JNJ will be an attractive stock to own. 

Shares look particularly compelling right now, trading at 22.5x earnings. That’s slightly higher than the S&P 500’s P/E ratio of 19.2, but well below the stock’s five-year average P/E of 63.3. What’s more, JNJ is trading near its 52-week low of $150.71, and analysts give the stock a “moderate buy” rating with a mean price target of $180. That implies the stock has upside of 19%.  

Earnings are expected to grow 3.6% in 2023 despite the challenging macro environment. And investors shouldn’t lose any sleep over the safety of the company’s dividend. Johnson & Johnson is a dividend king, having increased its dividend for 61 consecutive years, with shares currently yielding 3%. 

JPMorgan Chase (JPM) 

March has come in like a lion for financial stocks, and not in a good way. The collapse of  SVB Financial Group (NASDAQ:SIVB) subsidiary Silicon Valley Bank last week caused a sharp sell-off in the sector. This included shares of JPMorgan Chase (NYSE:JPM), which fell 7% last week.

While this is certainly an important issue for investors to watch, as InvestorPlace’s Chris MacDonald points out, analysts are saying that the systemic risk of the event is likely to be limited. Thus, if you’re looking for blue-chip stocks to buy in March and can handle some volatility, this could be a great time to pick up shares of JPM on sale. 

JPMorgan’s fortress-like balance sheet is the main reason I’m bullish on the stock. The conventional wisdom is that banks will have to set aside a higher percentage of their reserves to cover potential credit defaults as the economy struggles. But JPMorgan Chase has one of the strongest balance sheets in the industry and has routinely done well in the “stress tests” set up after the financial crisis in 2007 and 2008. 

JPM stock is currently trading at an attractive P/E ratio of just under 11x earnings, below its five-year average and well below the S&P 500’s P/E ratio. Analysts’ average price target is $157, which would be a 17.5% gain for investors.  

McDonald’s (MCD) 

Next up on this list of blue-chip stocks to buy is McDonald’s (NYSE:MCD). The company held its own during the pandemic. Then, when many analysts expected the company’s financials to be under pressure due to the economy reopening, McDonald’s kept on delivering.  

This continued strength showed how successfully McDonald’s made a pivot from being a dine-in hangout to a digital juggernaut. In its latest move, the company is testing a new drive-thru concept in which orders placed on its app are picked up in a separate order-ahead lane. This new format should help keep labor costs in line and help profit margins improve. As it stands, McDonald’s nearly 27% net profit margin is roughly three times the sector average.  

The company also benefits from having most of its stores owned by franchisees. This allows McDonald’s to keep approximately 80% of the revenue from these stores.  

I won’t try to tell you MCD stock is cheap. It’s currently trading at over 31x earnings. But this is a stock that is up 175% in the past 10 years. And that growth doesn’t account for McDonald’s dividend, which the company has been increasing for the past 46 years. Shares currently yield 2.3%.  

Lockheed Martin (LMT) 

Now is a good time for investors to consider defense stocks, and one of the top names on that list is Lockheed Martin (NYSE:LMT). One of the company’s core capabilities is manufacturing fighter jets, which remain a primary weapon of war. And the winds of war are definitely blowing. 

Lockheed Martin also plays a significant role in the aerospace industry. Space is becoming big business and Lockheed has a large business in satellites.  

The ongoing budget battle in Congress could put a damper on defense spending. That’s a risk you take when investing in a company that relies on the U.S. government for a lot of its business. But at 21.6x earnings, LMT stock looks appropriately valued, making it one of the best blue-chip stocks to buy in March. And that’s particularly true when you look at the company’s dividend. The yield is only 2.5%, but the annual payout is an impressive $12 a share.  

Caterpillar (CAT) 

Despite shares being down around 20% at the close of last year’s third quarter, Caterpillar (NYSE:CAT) managed to finish 2022 up nearly 19%. CAT stock has been bouncing around as investors wait to see how the company will benefit from the major infrastructure spending package passed last year.  The money takes a while to flow, but it’s starting to move now. And that’s likely to be bullish for Caterpillar.

While the company’s fourth-quarter sales rose 20% year over year to $16.6 billion, beating estimates, earnings came up short at $3.86 per share. However, this still represented 43.5% growth over a year ago and it was the only quarter to miss EPS estimates in 2022. For the full year, the company saw revenue increase 17% to $59.4 billion, while adjusted profit per share was up 28% to $13.84. That growth is expected to continue this year, with analysts forecasting a 12% jump in earnings on 7% revenue growth.

Caterpillar may have to apply some of those earnings to getting its debt back in line. But it will still be enough to manage its quarterly dividend of $1.20 a share. The company has a payout rate of just 28%, 30 consecutive years of dividend increases under its belt, and a yield of 2.1%.  

American Express (AXP) 

The last of the blue-chip stocks to buy in March is American Express (NYSE:AXP). I included American Express as one of my undervalued blue-chip stocks to buy in February. It’s still a little undervalued, so I’m still keeping it on the list. The company operates as both a credit card company and a payments network.

In the company’s most recent earnings report, management said it is setting aside more of its profits to cover potential charge-offs as delinquencies rise. I noted last month that this is a bit concerning, as American Express typically caters to a higher-income crowd. However, I also noted that the company is seeing strong revenue growth and is forecasting solid earnings growth for the rest of 2023. 

And even if the company has to set aside more earnings, that should have little impact on its dividend, which is covered by just 19% of earnings and currently yields 1.5%.  

On the date of publication, Chris Markoch had a LONG position in MCD. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.