The most valuable chips in poker are the blue ones. We object to the notion of comparing investment to poker. Assets should be kept apart from games of chance. Nevertheless, the name "blue-chip stocks" has persisted for a particular set of stocks.
What exactly are blue-chip stocks, then?
Blue-chip stocks have a solid track record and pay dividends. They frequently dominate their respective markets and have a strong track record of increasing dividend payouts. As a result, even during recessions, blue-chip stocks typically continue to be lucrative.
The companies with blue chip stocks are well-known ones with a history of sustained profitability. In addition, a blue chip corporation often has a sizable consumer-facing operation and is a prominent, established leader in its industry.
This means that in addition to thinking about investing in stock, you may already be familiar with the firm if you use its goods or services.
What it means when a company is a blue-chip
There are few blue chip stocks because they are often the most well-known brands in their respective industries. There isn't, however, a defined list of blue chip stocks or arbitrator who decides which businesses get the title.
Instead, these businesses, and hence their stocks, are known for a few essential traits:
Sustained success: A blue chip company has a proven track record, frequently indicating that it will be around for a while. The history of its stock price will demonstrate sustained price growth in a favorable direction.
While blue chip firms are not exempt from the ups and downs that any publicly traded company faces, they generally retain the ability to make money despite changes in management, technological upheaval, and other challenges.
Payment of dividends: Most blue chip stocks regularly distribute dividends to shareholders. Although there are rare exceptions, many blue-chip businesses reward long-term investors with steady dividend payments that often increase over several years.
Blue chip stock examples
Though this is not a comprehensive list of the stocks that fall under the blue-chip category, this sample demonstrates that blue-chip stocks are found in all sectors of the economy.
Examples of blue chip stocks are shown below.
Apple (AAPL)
Boeing (BA)
Coca-Cola (KO)
HOME CENTER (HD)
IBM (IBM)
Smith & Johnson (JNJ)
Microsoft (MSFT)
McDonald's (MCD)
Product & General (PG)
Walmart (WMT)
FINAL INSIGHT
High-priced market stocks, known as blue-chip stocks, have recently been popular among investors.
Blue chip growth stocks are frequently viewed as a substitute for riskier, newer growth stocks. That does not imply that one is superior to the other. People that prefer greater risk in their investments can decide to pursue growth stock dividends with more significant fluctuation, which occasionally has a better chance of fast paying off.
Conversely, businesses with blue chip stocks frequently have a strong and consistent history of paying dividends, but they might need sharp increases in growth stocks. Since they are the best investments for long-term investors, people frequently hang onto these capital gains stocks for a long time.
