The S&P 500 index has experienced a stellar rally in 2024, climbing 25.3% year to date. This impressive growth has been fueled by a combination of the Federal Reserve’s accommodative monetary policy, a booming artificial intelligence sector, solid economic expansion and a strong labor market driving higher consumer spending. These dynamics have created a favorable environment, elevating investor optimism and propelling the market to new highs.
However, as 2025 approaches, questions arise about whether this momentum can persist. The Federal Reserve’s outlook for fewer rate cuts, along with potential shifts in tariff policies under the new regime and other geopolitical challenges, could temper market gains. Nonetheless, a resilient labor market and favorable corporate earnings are likely to act as tailwinds in the new year.
Amid such a mixed backdrop, blue-chip retail stocks — Walmart Inc. WMT, Costco Wholesale Corporation COST and The Home Depot, Inc. HD — offer a compelling option for those looking to navigate 2025 market trends.
Why Blue-Chip Retail Stocks Are a Safe Bet
These blue-chip giants are known for their financial strength and history of delivering reliable returns to shareholders. They tend to be less volatile than other stocks, making them dependable choices for seasoned investors and those newer to the market. They often provide steady dividend payouts, adding an extra layer of stability.
These retailers have strong market positions, excellent brand recognition, loyal customer bases and broad market reach, which provide them with a significant competitive edge and open up new growth opportunities. Their ability to adapt to changing consumer behaviors, embrace new technologies and innovate, and enhance scalability and operational efficiency enables them to stay ahead of the curve.
YTD Price Performance of WMT, COST & HD
Image Source: Zacks Investment Research
3 Blue-Chip Retail Stocks to Watch
Walmart: Embracing Technology for Growth
Walmart has been working to strengthen its already formidable presence in the market. The company has embarked on a series of strategic e-commerce initiatives, encompassing acquisitions, partnerships and significant improvements in its delivery and payment systems. Walmart is committed to elevating its merchandise offerings, ensuring a diverse and appealing product assortment. Innovation extends to its supply chain, wherein the company is enhancing capacity and introducing cutting-edge solutions.
As of Monday’s session, Walmart’s market capitalization stood at $725.8 billion. This Zacks Rank #3 (Hold) company has a trailing four-quarter earnings surprise of 9.3%, on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Walmart’s current financial-year sales and earnings per share (EPS) suggests growth of 4.7% and 11.3%, respectively, from the year-ago reported numbers. The company pays out a quarterly dividend of about 21 cents per share (83 cents annualized). WMT’s payout ratio is 34, with a five-year dividend growth rate of 2.6%. (Check WMT’s dividend history here)
Costco: Leveraging Membership Model for Success
Costco has navigated market ups and downs effectively, driven by strategic investments, a customer-centric approach, merchandise initiatives and a strong emphasis on memberships. By identifying untapped markets and tailoring offerings to customer preferences, Costco has deepened its market presence. The company’s high membership renewal rates, efficient supply chain management and bulk purchasing power ensure competitive pricing and foster strong customer loyalty.
Costco has a market cap of $421.7 billion. This Zacks #3 Ranked company has a trailing four-quarter earnings surprise of 2%, on average.
The Zacks Consensus Estimate for Costco’s current financial-year sales and EPS implies growth of 7% and 11.5%, respectively, from the year-ago period’s actuals. The company pays out a quarterly dividend of $1.16 per share ($4.64 annualized). COST’s payout ratio is 28, with a five-year dividend growth rate of 13.1%.
See the Zacks Earnings Calendar to stay ahead of market-making news.
Home Depot: Capitalizing on Home Improvement Trends
Headquartered in Atlanta, GA, Home Depot stands as another distinguished blue-chip stock, dominating the home improvement retail sector. Its consistent expansion in Professional and Do-It-Yourself segments, fortified by an extensive product lineup and digital innovations, underpins its remarkable success. The company's interconnected retail strategy and robust technological infrastructure have amplified web traffic, leading to growth in digital sales. As mortgage rates decline, it could potentially stimulate homebuying activity and drive demand for renovation and remodeling projects.
Home Depot has a market cap of $389.8 billion. This Zacks Rank #3 company has a trailing four-quarter earnings surprise of 2.3%, on average.
The Zacks Consensus Estimate for Home Depot’s current financial-year sales and EPS calls for growth of 3.9% and 0.1%, respectively, from the year-ago period’s reported number. The company pays out a quarterly dividend of $2.25 ($9.00 annualized) per share. HD’s payout ratio is 60, with a five-year dividend growth rate of 11.5%.
Zacks Naming Top 10 Stocks for 2025
Want to be tipped off early to our 10 top picks for the entirety of 2025?
History suggests their performance could be sensational.
From 2012 (when our Director of Research Sheraz Mian assumed responsibility for the portfolio) through November, 2024, the Zacks Top 10 Stocks gained +2,112.6%, more than QUADRUPLING the S&P 500’s +475.6%. Now Sheraz is combing through 4,400 companies to handpick the best 10 tickers to buy and hold in 2025. Don’t miss your chance to get in on these stocks when they’re released on January 2.
Be First to New Top 10 Stocks >>Walmart Inc. (WMT) : Free Stock Analysis Report
The Home Depot, Inc. (HD) : Free Stock Analysis Report
Costco Wholesale Corporation (COST) : Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
