Just about any group you can think of has its all-stars that lead the rest of the pack (think baseball). The name “blue-chip” is said to be a reference to the game of poker, in which the blue-colored chips are worth more than the others. So if you’re looking to invest in some top-quality shares, you may not have to look any further than blue-chip stocks. They’re usually well-known companies that stand out from competitors in their industries. Investing in one of these blue-chip stocks will usually be less stressful for the risk-averse investor.
Today, blue chip stocks aren’t necessarily stocks with a high price tag. More accurately, they are shares of high-quality companies in healthy financial condition that have withstood the tests of time. Blue chip stocks are among the most defensive and reliable stocks you can buy. They have earned the blue chip moniker from years of sound business practices and consistent generation of cash flow. While blue chips are well-run companies that dominate their fields, they can still have rough patches where their stock prices fall. But as long as you keep this risk in mind, you can generally rely on the fact that blue chip companies will outrun, outlast and outmaneuver their competitors over the long run.
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Being too heavily weighted in any single asset class, even blue-chip stocks, unnecessarily increases the risk of the overall portfolio. In our blue chip screener’s algorithm, ITC scores a very high rating. There is no doubt that Blue Chip stocks are stocks of the highest quality available in the market.
Index funds and ETFs track an index, which is a specific segment of the stock market. Since blue-chip stocks typically have large market caps, a large-cap index fund or ETF is a good way to get exposure to these companies. You can also buy a fund that tracks the S&P 500 or the Dow Jones Industrial Average since both include blue-chip stocks. Generally, yes, a lot of investors consider blue-chip stocks good investments. Because of their lower risk, more established company, and consistent performance, these are considered ideal for most portfolios. Just as blue chips in poker hold the highest value, so do blue-chip stocks in the stock market.
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Coca-Cola Company is an example of a blue-chip company whose stock has increased significantly and steadily over more than a century, and it has a strong dividend-payout history. Coca-Cola has increased its dividend payment for more than 58 consecutive years. But as per our algorithm, earns a low score on almost all parameters as explained above.
Examples are hypothetical, and we encourage you to seek personalized advice from qualified professionals regarding specific investment issues. Our estimates are based on past market performance, and past performance is not a guarantee of future performance. A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.
Blue Chip Stocks Have Something to Offer Every Investor
The company’s products are sold in over 190 countries and its signature “Just Do It” slogan is widely recognised globally. Visa has very high net margins, fluctuating around 50% since 2018. That efficiency supports ongoing investment in Visa’s global financial network as well as share buybacks and dividend payments. You might rely on current conditions to narrow your list of options today, but plan on holding these positions through bear and bull markets. They can face serious business disruptions, as Boeing and Disney have in recent years. Fortunately, they have access to capital, financial strength and experienced leadership on their side.
How to Find Blue Chip Dividend Stocks – Nasdaq
How to Find Blue Chip Dividend Stocks.
Posted: Fri, 03 Mar 2023 08:00:00 GMT [source]
An author, teacher & investing expert with nearly two decades experience as an investment portfolio manager and chief financial officer for a real estate holding company. Blue-chip stocks cut across various industries and some notable ones include Walmart, American Express, Nike, Microsoft, Home Depot, JPMorgan Chase and Exxon Mobil. This does not constitute financial product advice nor a recommendation to invest in the securities listed. Past performance is not a reliable indicator of future performance.
How Do You Buy Blue Chip Stocks?
Berkshire Hathaway (BRK.A -1.58%)(BRK.B -1.33%) is a major player in the insurance industry, offering various lines of commercial and personal insurance through subsidiaries GEICO and Gen Re. But Berkshire also owns a diverse set of businesses such as restaurant chain Dairy Queen, railroad giant BNSF, and its Berkshire Hathaway Energy utility company. With such a broad range of businesses, the company has a reputation Blue chip stock list for safety and security, as well as consistent performance. Blue chip stocks are the stocks of well-known, high-quality companies that are leaders in their industries. These companies have stood the test of time and are respected by their customers and their shareholders. While there is no formal definition of a blue-chip stock, these companies are known for being valuable, stable and established.
They tend to pay smaller dividends than income stocks and greater dividends than growth stocks. Their prices also tend to be higher than growth stocks because they are considered less risky, but they don’t have the same potential for growth. A blue chip stock is the stock of a company that is considered to be a reliable performer, with a history of consistent growth. That’s not to say a blue chip stock will earn money every year, or that it will never decline in value.
Blue-chip stocks: pros and cons
This is a great option for investors who don’t want to purchase individual stocks or simply want a more set it and forget it option for this percentage of their portfolio. But if you’re still not convinced, here are a couple of additional reasons why blue chip stocks have a place in every portfolio. In addition to https://investmentsanalysis.info/ receiving dividends, many blue chip stocks give investors the ability to reinvest their dividends. Reinvesting dividends is a solid strategy that can boost total return and deliver the benefit of compounding. However, the “price” that investors pay for that stability is muted (but not nonexistent) organic growth.
- You can also consider getting exposure to blue-chip stocks by investing in mutual funds or exchange-traded funds (ETFs) that specifically invest in blue-chip stocks.
- In some cases, we receive a commission from our partners; however, our opinions are our own.
- Johnson & Johnson is an American multinational corporation that was founded in 1886.
- Investors also appreciate the dividends blue-chip stocks typically pay.
- A garage project has turned into a powerful company that is best known for inventing one of the most popular operating systems in the world.
And keep in mind that many of these companies increase their dividends every year. Volatility profiles based on trailing-three-year calculations of the standard deviation of service investment returns. Johnson & Johnson (JNJ 0.2%) is well-known for its popular consumer products, including baby shampoo, Band-Aids, and Tylenol pain reliever. But J&J is a true healthcare giant, making a wide array of medical devices to help doctors and other medical professionals perform life-saving procedures. Johnson & Johnson also has a vast pharmaceutical business and produces drugs such as the arthritis treatment Remicade, prostate cancer drug Zytiga, and psoriasis drug Stelara. Many or all of the products featured here are from our partners who compensate us.
Which is the best bluechip funds?
- Nippon India Large Cap Fund.
- Kotak Bluechip Fund.
- ICICI Prudential Bluechip Fund.
- SBI Bluechip Fund.
- Franklin India Bluechip Fund.
- Aditya Birla Sun Life Frontline Equity Fund.
- IDFC Large Cap Fund.