See Also:
Preferred Stocks (Preferred Share)
Stocks Firm; Focus on Fed

Blue Chip Stocks Definition

Blue chip stocks are long-established, well-known companies with reliable earning power and growth over time. Following are common characteristics of blue chips:

• Sell diversified and high quality products and services in a variety of geographic locations
• Competitive advantage in the market through their reputation and cost efficiencies
• Steady consumer demand for products and services because they are not affected by changing technology or changing consumer tastes
• Long-term share price returns
• Consistent dividend payments to common stock holders with a tendency to increase dividends payable to each share
• Solid balance sheets with secure assets and minimal debt levels allow them to borrow money at a lower cost than competitors
• Excellent credit ratings
• Known to overcome operate profitability in economic downturns
• Large and steady revenue streams and market capitalization

Benefits of Owning Blue Chip Stocks

Blue chip stocks can be some of the best investments in the market because they provide consistent dividend payments and long-term price returns. While many consider blue chips as boring and outdated, these stocks have consistently demonstrated growth and profits.

The Dow Jones Industrial Average

The Dow Jones Industrial Average provides a list of the thirty most prestigious blue chip companies around the world. Editors of the Wall Street Journal analyze and select the list of blue chips for the Dow Jones. This list rarely changes because of the stability of blue chip stocks.

How to Invest in Blue Chip Stocks

Investors can purchase blue chip stock investments through any one of the following:

• Broker
• Direct Stock Purchase Plan
• Dividend Reinvestment Plan

Examples of Blue Chip Stocks

Some examples of blue chip stocks include the following:

• Coca-Cola
• Johnson & Johnson
• General Electric
• General Mills

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