Why I Think These Are the 2 Smartest Stocks to Buy With $5,000 in October

It might seem like a risky time to buy new stocks. The Fed raised its benchmark rates for the first time in three years in September, and the 10-Year Treasury's 5.3% yield -- its highest level since 2007 -- is pulling investors toward safer fixed-income investments.

But over the long run, many blue chip dividend stocks still outperform CDs, bonds, and T-bills. Let's take a look at two of those stocks -- AbbVie (NYSE: ABBV) and Medtronic (NYSE: MDT) -- which are worth buying with $5,000 (or more) to ride out the near-term volatility.

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AbbVie

AbbVie, one of the world's largest pharmaceutical companies, has raised its dividend annually for 53 consecutive years. That makes it a Dividend King, a company that has increased its payout for at least 50 straight years. It pays a forward yield of 2.6%.

In 2023, AbbVie lost its U.S. patent exclusivity for Humira, its blockbuster autoimmune drug. But to offset that blow, it acquired several companies -- including Allergan (the maker of Botox), ImmunoGen, and Cervel -- and launched new blockbuster drugs like Skyrizi and Rinvoq.

That aggressive expansion paid off, and analysts expect its revenue and adjusted EPS to grow at CAGRs of 9% and 21%, respectively, from 2025 to 2028. That growth should be driven by Skyrizi and Rinvoq, ImmunoGen's oncology drugs, and Cervel's neuroscience drugs.

Its stock has risen 15% year to date and is hovering near its record high, but it still looks like a bargain at 16 times next year's earnings. It's not an exciting investment, but it's a safe place to park your cash and earn some passive income.

Medtronic

Medtronic, one of the world's top medical device makers, is on the verge of becoming a Dividend King with 49 consecutive years of dividend hikes. It pays a forward yield of 3.3%.

Over the past few years, Medtronic struggled with supply chain constraints, rising costs, quality control issues, and tougher competition. But to stabilize its business, Medtronic spun off its diabetes unit as MiniMed (NASDAQ: MMED), reined in its spending, and focused on expanding its higher-growth cardiovascular and neuroscience businesses.

Those turnaround efforts boosted Medtronic's organic revenue by 5.8% in fiscal 2026 (which ended this April), and it expects that figure to rise another 7.25%-7.75% in fiscal 2027.

From fiscal 2026 to fiscal 2029, analysts expect its reported revenue and EPS to grow at CAGRs of 5% and 15%, respectively. Yet its stock is still down 8% year-to-date and trades at just 18 times this year's earnings -- so it could be another reliable stock to buy and hold in this shaky market.

Leo Sun has positions in AbbVie. The Motley Fool has positions in and recommends AbbVie and Medtronic. The Motley Fool has a disclosure policy.