Blue Chip Stocks Meaning
- Blue chip stocks are publicly listed securities issued by leading companies that possess large market capitalization.
- Blue chip investments provide the desired results only if held long-term. ...
- These stocks are found on top stock market indices—S&P 500, Dow Jones Industrial Average (DJIA), NASDAQ, and National Stock Exchange (NSE).
Full Answer
What are the top 10 blue chip stocks?
had 95 stocks in his portfolio. But you don’t have to have that many. Anywhere from 10 to 20 will get you diversity. 3. You don’t have to own technology companies. Many blue-chip investors ignore the sector because many companies don’t pay dividends.
How to invest in a blue chip stock?
Blue-chip stocks are among the safest stocks you can buy, but they don't eliminate the need for basic risk-management strategies. Remember to diversify and monitor your holdings. These are not hard action items, either. You can invest in a blue-chip ETF ...
What does blue chip mean in stocks?
A “blue chip” is the stock of a well-established, financially sound, and historically secure corporation. Examples of blue chip stocks include Coca-Cola, Disney, Intel, and IBM. Because the return on blue chip stocks is close to a sure thing, the stocks tend to be expensive and to have a low dividend yield.
What are some examples of blue chip stocks?
SEARCHING FOR BLUE CHIP STOCKS-KEY SECTORS
- Utilities & Energy. The global economy runs on electricity, oil and natural gas. ...
- Consumer Staples. Another sector that is essential to our lives is consumer staples. ...
- Technology & Telecommunications. For our next sector of blue chips stocks with rich dividends let’s talk about technology and telecommunications.
- Health Care. ...
- Services. ...
- Industrials. ...
Which are blue-chip stocks?
What are Blue-chip Stocks? Stocks that are issued by blue-chip companies, i.e. companies with a large market capitalisation are termed as blue-chip companies. Companies who issue these shares are well-established and enjoy great market repute; therefore, the shares issued by them are highly valued in the market.
Which are blue-chip companies?
What do IBM, Walmart, JPMorgan Chase, and DuPont have in common? Although they are in different sectors, they are all known as blue chip companies. Blue chip companies are the mature firms that represent the stalwarts of an industry. These stable, profitable, and long-lasting companies are relatively safe investments.
Is Apple a blue chip stock?
Examples of blue-chip stocks Indices like the FTSE 100 and S&P 500 contain a mix of blue-chip stocks and large- or mid-cap companies that aren't considered blue chip. Blue-chip stocks are subject to change, but some common examples include: Apple.
What is the difference between a regular stock and a blue chip stock?
Income stocks provide regular income by distributing a company's profits, or excess cash, through dividends that are higher than the market average. Blue-chip stocks are shares of well-established companies with a large market capitalization.
Is Netflix a blue chip stock?
With that in mind, let's see why now is a good time to invest in beaten-down blue-chip companies Netflix (NFLX 1.98%) and Adobe (ADBE 4.80%).
How do you pick blue chip stocks?
Stocks that are considered blue-chip stocks generally have these things in common:Large market capitalization. Market cap is a measure of the size and value of a company. ... Growth history. Blue-chips have a reliable, solid history of sustained growth and good future prospects. ... Component of a market index. ... Dividends.
Is Tesla a blue chip?
Tesla's Financial Profile Though an incredibly popular company, Tesla's stock hasn't received blue-chip status. When a company earns blue-chip status, that means it has a longstanding history of profitability and success in its industry.
Is Amazon Blue Chip?
Blue-chip stocks are ones instantly recognized as established, dominant names in their respective industries. Take Amazon.com, Inc. (NASDAQ:AMZN), Microsoft Corporation (NASDAQ:MSFT), and The Coca-Cola Company (NYSE:KO), for example.
What is a red chip stock?
What Is a Red Chip? A red-chip company is one that does most of its business in China, and which the Chinese government has a considerable stake in the firm. Red-chips, however, are incorporated outside mainland China and listed on the Hong Kong Stock Exchange.
What are the 4 types of stocks?
Here are four types of stocks that every savvy investor should own for a balanced hand.Growth stocks. These are the shares you buy for capital growth, rather than dividends. ... Dividend aka yield stocks. ... New issues. ... Defensive stocks. ... Strategy or Stock Picking?
What are the 3 types of stocks?
We covered three different types of stocks.Growth stocks — aimed to outperform the average market return.Value stocks — shares priced lower than the book value.Income stocks — focused on high-yield dividend returns.
Are blue chip stocks high risk?
Blue-chip stocks are not high risk, so they're popular among investors with lower risk tolerance. While blue-chip stocks aren't bulletproof, their history of resisting market downturns makes them an appealing choice for many investors.
What is a blue chip?
The term "blue chip" was first used to describe high-priced stocks in 1923 when Oliver Gingold, an employee at Dow Jones, observed certain stocks trading at $200 or more per share. 1 Poker players bet in blue, white, and red chips with the blue chips having more value than both red and white chips. Today, blue-chip stocks don’t necessarily refer to stocks with a high price tag, but more accurately to stocks of high-quality companies that have withstood the test of time.
What is a blue chip company?
A blue-chip company is a multinational firm that has been in operation for a number of years. Think companies like Coca-Cola, Disney, PepsiCo, Walmart, General Electric, IBM, and McDonald’s, which are dominant leaders in their respective industries.
Why are blue chips called blue chips?
The name "blue chip" came about from the game of poker in which the blue chips have the highest value. Many Conservative investors with a low risk profile or nearing retirement may usually go for blue-chip stocks.
Why are blue chip companies important?
Blue-chip companies are known to weather downturns and operate profitably in the face of adverse economic conditions, which helps to contribute to their long record of stable and reliable growth. 1:27.
Is a stock liquid?
The stocks are highly liquid since they are frequently traded in the market by individual and institutional investors alike. Therefore, investors who need cash on a whim can confidently create a sell order for their stock knowing that there will always be a buyer on the other end of the transaction.
Is it safe to invest in blue chip stocks?
Blue-chip stocks are seen as relatively safer investment s, with a proven track record of success and stable growth. Blue-chip stocks are still nonetheless subject to volatility and failure, such as with the collapse of Lehman Brothers or the impact of the financial crisis on General Motors.
Do blue chip stocks pay dividends?
The solid balance sheet fundamentals coupled with high liquidity have earned all blue-chip stocks the investment-grade bond ratings. While dividend payments are not absolutely necessary for a stock to be considered a blue chip, most blue chips have long records of paying stable or rising dividends.
Introduction
There are many different investment categories people can choose to invest in and each of those has its benefits and drawbacks. While there are hundreds of publicly-traded companies that most of us have never heard of, blue-chip stocks allow people to put their money in enterprises they know well.
What Are Blue-Chip Stocks?
Blue-chip stocks are stocks issued by large, well-established companies that has a proven track record of financial success. In many cases, the companies in this category of stocks are household names that you are likely to be familiar with.
Why Are Blue-Chip Stocks Popular?
For many, especially long-term, investors, blue-chip stocks are the cornerstone of their portfolio. Their low volatility, steady performance, and regular dividend payments make them reliable anchors.
Where To Find Blue-Chip Companies
There are blue-chip companies in virtually every sector and they’re easy to find as they’re normally (one of the) leaders in a particular industry. The Dow Jones Industrial Average is known as a “blue-chip” index as it’s composed of the biggest companies in the United States.
How To Invest In Blue-Chips
There are different ways you can choose to invest in blue-chip stocks. Whereas active investors might choose to purchase individual stocks, more passive investors would probably prefer to invest in an ETF that tracks a blue-chip index.
Downsides of Investing in Blue-Chips
The stability and low volatility of blue-chip stocks appeal to many investors, but some, especially young and risk-hungry investors, tend to stay away from blue-chip stocks for a couple of reasons:
Conclusion
Blue-chip stocks, on the whole, are popular investments due to their proven long-term track record of financial stability and performance. The share prices of these companies have often grown steadily for decades and most of them pay relatively high, and often increasing, dividends.
Blue chip stock definition
Blue chip stocks are well-known companies that generally have long-term track records of success. A blue chip company tends to be a large, well-established leader in its sector and may also have a substantial consumer-facing business.
What makes a stock a blue chip stock?
Because blue chip stocks are usually the most dominant names in their respective industries, there are a limited number of them. However, there is no official list of blue chip stocks or any formal arbiter who dictates which companies land the blue chip designation.
Should you invest in blue chip stocks?
Despite the Kodak and Sears examples, it’s important to note that blue chip stocks can be the bedrock of an investing portfolio. Some may still be in full-on growth mode while many others are very mature companies.
Examples of blue chip stocks
While this is by no means an exhaustive list of all the stocks that can be classified as blue chip, this sampling helps show that blue chip stocks come from all industries.
Alternatives to blue chip stocks
If you’re new to investing and considering buying individual blue chip stocks, you may reconsider and instead invest in a broader, diversified index. For example, the S&P 500 includes all the major blue chip names, while also including plenty of other companies that are profitable and growing.
What is blue chip stock?
A blue chip stock is a large, financially-sound, nationally-recognized and well-established business. Blue chip companies usually sell high-quality and broadly-used products and services. They are known for their long-term track records of stable and reliable growth, helping them operate profitably regardless of current economic conditions. Learn more.
Why are blue chip stocks so popular?
Because of their popularity, blue-chip stocks can be easy to buy and sell. This helps ensure that investors will be able to buy or sell a stock when they desire. Tax-free benefits. A blue-chip stock can be included in a stocks and shares ISA, which can protect gains from taxation.
What makes a blue chip stock a good investment?
There is no single definition of what a blue-chip stock is, but they share common attributes that include strong balance sheets which include large, positive cash flows, enduring business models that create fundamental and intrinsic value which , in return, help these stocks to deliver solid growth. These are just some of the reasons that these stocks are considered to be secure investments. Investors who own blue-chip stocks rely on them for their consistent growth and also for their ability to provide regular dividend payments.
Why are blue chip stocks so attractive?
Blue-chip stocks are known for their stability. This doesn't mean that blue chip stocks don't grow. It simply means that these stocks tend to show less volatility than the broader market. They will typically have an attractive price-earnings ratio. This stability is one of the qualities that make these attractive stocks to buy particularly for buy-and-hold investors who are looking for value and growth. While these stocks may not show the aggressive growth of small-cap or mid-cap stocks, they offer a higher degree of certainty for investors who can count on these stocks to rise during good times, but perhaps not fall as dramatically when the stock market is down.
What are the disadvantages of blue chip stocks?
Disadvantages to blue-chip stocks. For most investors, blue-chip stocks are appealing investments. However, the stability and well-known brand names associated with these stocks can also limit the profit profits for younger investors for a few reasons: Blue-chip stocks do not generally beat the stock market – Almost by definition, ...
What does it mean when you hear the word "blue chip"?
When we hear the words “blue chip” we may think of something of the highest quality and value. In the game of poker, the blue chips always represent the highest dollar value. A blue-chip panel of experts is considered to consist of individuals of the highest knowledge and character to bring to a subject.
Do blue chip stocks pay dividends?
Blue chips have a strong dividend history. Most, but not all, blue-chip stocks have a history of paying a dividend. And many make dividend growth as a reward to their shareholders a primary goal. One of the reasons this is possible is because blue-chip companies typically have rock-solid balance sheets.
Why are blue chip funds good for retirement?
Blue chip funds offer an easy way to build diversified exposure to high-quality stocks, and these equities can be particularly good investment vehicles for people who are in or nearing retirement because they tend to be less volatile than individual stocks.
Is blue chip a good investment?
Blue chip stocks are smart investments for investors of all kinds. Beginner investors are likely familiar with the products and services of blue chip companies. Familiarity with a company makes stock buying more comfortable, and it’s exciting to become a partial owner of a business you know. Meanwhile, long-time investors will have seen blue chip stocks rise to the top over the long haul, outlasting their weaker rivals and finding ways to stay relevant and keep growing even as their industries change.
What is blue chip stock?
Enter blue-chip stocks: Typically large-cap, established, stable businesses that might not be setting growth records but are financially sound. Blue-chip stocks are favorites of low-risk investors – individuals who may want to participate in some stock market gains, but not risk the farm to do so.
What are the best blue chip stocks to buy in 2021?
First among the best blue-chip stocks to buy for 2021 is the health care and consumer goods giant Johnson & Johnson. The company has been around since 1886 and has been a healthy, diversified "steady Eddy" stock for decades. In fact, JNJ is such a well-rounded, financially sound company that rating agencies have given its debt a perfect AAA rating – a measure of risk that suggests Johnson & Johnson has a lower risk of defaulting than the U.S. government. Worth around $400 billion, JNJ pays a 2.6% dividend, which is more than double the rate that U.S. 10-year Treasurys pay. Analysts expect earnings per share (EPS) to rise by about 12% in 2021. The stock trades for less than 24 times earnings.
How much will Berkshire Hathaway stock increase in 2021?
Analysts expect earnings per share (EPS) to rise by about 12% in 2021. The stock trades for less than 24 times earnings. The largest company on this list, famed financial conglomerate Berkshire Hathaway, which grew to prominence under the iconic long-term investor Warren Buffett, is worth around $530 billion.
How much did ABBV rise in 2019?
Not including dividends, ABBV rose roughly 17% on the year through mid-December, as the overdone 2018 and 2019 sell-off – driven in part by the drugmaker's $63 billion purchase of Botox-maker Allergan – began to be corrected by the markets.
Introduction
What Are Blue-Chip Stocks?
- Blue-chip stocks are stocks issued by large, well-established companies that has a proven track record of financial success. In many cases, the companies in this category of stocks are household names that you are likely to be familiar with. Among more cautious investors, blue-chip stocks are popular because of their stable returns on investmentove...
Why Are Blue-Chip Stocks Popular?
- For many, especially long-term, investors, blue-chip stocks are the cornerstone of their portfolio. Their low volatility, steady performance, and regular dividend payments make them reliable anchors. Below we’ll look at the advantages of investing in blue-chips a little closer: We’ll take a more in-depth look at the benefits of investing in blue-chip stocks in the sections below:
Where to Find Blue-Chip Companies
- There are blue-chip companies in virtually every sector and they’re easy to find as they’re normally (one of the) leaders in a particular industry. The Dow Jones Industrial Averageis known as a “blue-chip” index as it’s composed of the biggest companies in the United States. You might be familiar with many of these enterprises as blue-chips often make products that we use daily. This familia…
How to Invest in blue-chips
- There are different ways you can choose to invest in blue-chip stocks. Whereas active investors might choose to purchase individual stocks, more passive investors would probably prefer to invest in an ETF that tracks a blue-chip index.
Downsides of Investing in blue-chips
- The stability and low volatility of blue-chip stocks appeal to many investors, but some, especially young and risk-hungry investors, tend to stay away from blue-chip stocks for a couple of reasons:
Conclusion
- Blue-chip stocks, on the whole, are popular investments due to their proven long-term track record of financial stability and performance. The share prices of these companies have often grown steadily for decades and most of them pay relatively high, and often increasing, dividends. Additionally, their low volatility makes them suitable cornerstones of investment portfolios, helpi…