What are Blue Chip Stocks?

A blue chip stock is a enormous company with an excellent reputation. These are typically large, well-established and financially robust companies that have operated for many years and that have steady earnings, often paying dividends to investors. A blue chip stock typically has a market capitalization in the billions, is generally the market leader or among the top three or five companies in its sector.

List of Top Blue Chip Stocks

Why is Blue chip stocks a good investment?

Blue chip companies have adhered to the market for a good number of years and have endured many worst economic cycles & recessions but have survived the worst of the market. Any investor would want to invest in a business that has demonstrated profitability over multiple generations.

These companies are much less volatile and even if there poses a certain risk, the long-term investment horizon smoothens out this risk.

If you’re looking for maximum growth in your investments, you’ll want to make sure you go beyond blue-chip stocks to look at some up-and-coming small-cap stocks of innovative budding companies that are seeking to disrupt their larger rivals. These high-growth upstarts aim to be the blue-chip stocks of tomorrow.

Closing Thoughts

Just about every investor can benefit from having a portion of their portfolio invested in blue-chip stocks. It doesn’t have to be a set percentage, as different investors will have a different point of view about how much risk they want to assume. The more you want to preserve and protect the money you have invested in the stock market, however, the more attractive blue-chip stocks will be as you try to meet your objectives and reach your long-term financial goals.

Blue-chip companies are all matured, large-cap companies, hence their future growth is not as fast. If we will compare the potential returns of good “growth stocks” versus a blue-chip stock, the latter cannot win. Hence, it is essential to estimate one’s investment goal accurately. If the objective is faster capital appreciation in long term, growth stocks are better.