What Are Blue Chip Stocks?
Blue chip stocks are shares of large, well-known, financially strong companies with a long record of steady results. Think household names that have been around for decades.
Where the name comes from
In poker, the blue chips have the highest value. Wall Street borrowed the term for the most valuable, trusted companies.
What makes a company blue chip
- A large market cap.
- A long history of profit.
- A strong brand and solid finances.
- Often a steady dividend.
Are blue chip stocks a good investment?
They are usually steadier than smaller companies, and many pay reliable dividends. But big and famous does not mean safe from losses. Even giant companies can fall a lot when their business changes. And because they are already huge, they rarely grow as fast as smaller companies.
Where to find them
Many blue chip companies are in the Dow Jones and the S&P 500.
See it in real companies
Open a company to see what it sells and how it makes money.