Blue Chip Stock
What Does "Blue Chip" Mean?
At poker tables, blue poker chips are generally worth the most, followed by red and white chips. For example, blue chips may be worth $20 each with red chips worth $5 and white chips worth $1.
Outside of club, "blue-chip" has turned into a descriptor used to indicate things that are of the highest value or quality inside a specific category. In the investing world, the term is frequently used to depict specific companies or stocks.
What Are Blue-Chip Stocks?
Blue-chip stocks and companies are those that are deeply grounded, have a long and predictable history of growth and earnings, and have a high market capitalization (i.e., are worth large chunk of change as indicated by the market). In easier terms, a blue-chip is a large, regarded, notable, and effective company that has been around for quite a while. These companies are monstrous, financially sound, and have a history of strong earnings. Many blue-chip companies likewise pay dividends to their investors.
At the point when you think of "exemplary" or "major" American companies, a significant number of those that ring a bell are most likely blue chips. JP Morgan Chase, Coca-Cola, Walt Disney, Pfizer, and General Motors are just a couple of models. The Dow Jones Industrial Average (DJIA), a well known stock index, involves 30 major blue-chip stocks yet does exclude each stock that falls into that category.
Qualities of Blue-Chip Companies
Most blue-chip companies . . .
- have a high market capitalization (typically during the tens or hundreds of billions).
- are remembered for at least one major stock indexes like the S&P 500 or the DJIA.
- have been around for quite a while (many years).
- have a history of resistance to economic recessions.
- have low volatility and reliable growth.
- try not to have a nonsensical amount of debt.
- are notable household names.
15 Examples of Blue-Chip Companies
|3M (NYSE: MMM)||Costco (NASDAQ: COST)||Nike (NYSE: NKE)|
|Alphabet (NASDAQ: GOOGL)||Johnson & Johnson (NYSE: JNJ)||Proctor & Gamble (NYSE: PG)|
|Apple (NASDAQ: AAPL)||JP Morgan Chase (NYSE: JPM)||UnitedHealth Group (NYSE: UNH)|
|Berkshire Hathaway (NYSE: BRK)||McDonald’s (NYSE: MCD)||Visa (NYSE: VIS)|
|Coca Cola (NYSE: KO)||Microsoft (NASDAQ: MSFT)||Walt Disney (NYSE: DIS)|
More passive investors could like to gain exposure to many blue-chip stocks on the double without expecting to conduct too much research by purchasing shares of at least one blue-chip-themed ETFs or mutual funds. Famous blue-chip-centered ETFs incorporate SPY, which tracks the S&P 500 stock market index, and NOBL, which is an assortment of 50 blue-chip stocks whose dividend payments have increased over the long run.
5 Blue-Chip Stocks That Are Known for High Dividend Yields
- AT&T (NYSE: T)
- Territory Energy (NYSE: D)
- Bank of Nova Scotia (NYSE: BNS)
- General Mills (NYSE: GIS)
- Royal Dutch Shell (NYSE: RDS.A)
- Blue chip stocks are gigantic companies with magnificent notorieties, frequently including probably the greatest household names.
- Investors go to blue chip stocks since they have trustworthy financials and frequently pay dividends.
- There is an insight among investors that blue chips can endure market difficulties of numerous sorts; while this might be largely true, it's anything but a guarantee. Hence, broadening a portfolio past just blue-chip stocks is pivotal.
Are Blue Chips a Good Investment?
A diversified portfolio could incorporate the ownership of a rash of blue-chip stocks, meaning the stocks of large, very much capitalized, surely knew companies, among various different holdings. As well as possessing individual stocks, investors may likewise try to have blue-chip exposure through the purchase of mutual funds or exchange-traded funds (ETFs).
How Do I Invest in Blue Chip Stocks?
A market participant can buy blue chip stocks individually, or by buying mutual funds or exchange-traded funds (ETFs) that invest in blue-chip stocks. At times, funds and ETFs will hold various stocks and asset classes, including blue chips. In different cases, the funds or ETFs may be centered only around blue chips, for example, an ETF that tracks the Dow Jones Industrial Average, which contains 30 of the largest blue chip stocks.
Where Does the Term "Blue Chip" Come From?
The term "blue chip stock" comes from the world of poker, where chips utilized in gambling have various varieties to address different dollar amounts. A blue chip is regularly the one with the highest value of all, unbelievable white chips and red chips.
What Makes a Company a Blue Chip?
Blue chip stocks are the titans of their areas — industry-characterizing companies that are notable, all around capitalized, long-term stable plays with strong financial possibilities.
What Companies Are Considered to Be Blue Chips?
A considerable lot of the largest companies in the S&P 500 or the Dow 30, like IBM, JPMorgan Chase, or Walmart.