Blue chips stock

Written by Fmi.Online Friday January 6, 2023
Blue chip stocks are stocks issued by large market capitalization firms, which are leaders in their industries, release strong operating and financial results and consistently deliver dividend payments to their shareholders.


A blue-chip stock is named after the highest valued chips in poker because these companies are the most valuable in the world and have a market cap  of several billion dollars. They also have a reputation of excellent performance even during turbulent times, strong history of earnings growth, and strong brand name. Although a dividend payment  is not the main characteristic of BCS companies, well established, leading companies typically have a long-standing record of rising dividend payments and increasing shareholder value. Furthermore, these large companies are components of reputable market indexes, including the Dow Jones Industrial Average, the Standard & Poor’s (S&P 500) and others.

In a nutshell:

  • Blue chip stocks are huge companies with excellent reputations, often including some of the biggest household names.
  • Investors turn to blue chip stocks because they have dependable financials and often pay dividends.
  • There is a perception among investors that blue chips can survive market challenges of many kinds; while this may be largely true, it is not a guarantee. For this reason, it's crucial to diversify a portfolio beyond only blue-chip stocks.
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