Morningstar this week published a list of the best blue-chip stocks to own for the long term, noting in a blog post that investors often hold them at the core of their portfolios because blue-chip companies are leaders in their industries.
These companies have strong brand names and reputations, generate dependable earnings, usually boast consistent dividends and are often considered less risky, given their financial stability.
Investors may differ in how they define blue-chip companies, Morningstar noted, with some demanding that they be included in a particular index, others that they include only dividend-paying companies, and still others requiring specific market capitalization thresholds.
To identify the best blue-chip stocks to buy for the long term, Morningstar analysts screened for those from companies included on the firm's list of the Best Companies to Own. These have wide Morningstar economic moat ratings and predictable cash flows, and are run by management teams that make smart capital-allocation decisions.
The stocks on the list are undervalued, as measured by Morningstar's price/fair value metric, and the companies have market caps of more than $100 billion.
See the accompanying gallery for the 10 best blue-chip stocks that were most undervalued as of May 11. Year-to-date performance is as of May 14.
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