What are Blue Chip Stocks
A blue-chip stock is the stock of the companies that are well establishes within their sectors with an excellent reputation and have a higher market capitalization. These companies have been operating in the market for a long time. A company which is considered as blue chip will tend to be at or near the very top of its sector.
A Blue-chip stock often pay a steady dividend to their investors. A blue-chip company is immediately identifiable, financially solid, and has a wide range of distribution network. These businesses usually provide high-quality goods and services with good quality across the nation. A blue-chip is a long-term investment with a consistent growth.
Examples of Blue-chip Stocks
There is no any predefined formal list of blue-chip stocks but, typically, the components represent in INDEX will be considered as blue-chip indices-this include global indices such as the Dow Jones, the DAX, CAC 40 and Euro Stoxx 50.
Blue-chip stocks are subject to change but we have mention here some of the common examples.
• Johnson & Johnson
How to Choose the Best Blue-chip stocks?
A set of criteria determines a company is a blue-chip or not. Here we have mentioned some of the important point which helps to choose a blue-chip stock.
1. Low Risk- Blue-chip investments are recommended for those investors who want to achieve long term objectives of at least 5-7 years with a conservative risk profile. However, investing in these firms is an excellent way for all investors to build a diversify portfolio over time while avoiding risk and fluctuation.
2. Financially Resilient- These businesses are economically resilient, having little to no debt. The majority of the top blue-chip stocks to purchase area market leaders in their respective fields.
3. Portfolio Diversification- Blue-Chip stocks are those which has well diversified corporations with diverse revenue streams. As a result, the losses incurred by one channel are offset by revenues generated by another channel.
4. Consistent Returns- Blue-Chip companies are vast and widely known for their steady performance. The finest blue-chip investment has a track record of consistently returning to shareholders in the form of significant dividend distributions at regular periods.
Advantages of Blue-Chip Investments
Here we have mentioned some of the advantage for investing in blue chip stocks.
• Dividend- Blue-chip stocks are often pay our long term fi, which allow you to earn consistent and stable income. Even if you are not investing for payment, a dividend reinvestment plan will enable you to automatically transfer your dividends into new shares of your blue-chip company.
• Stability- As Blue-Chip stocks are the well-established and has a large capital hence these provide consistent returns.
• Financial Goals- Blue-chip investment will help you to achieve your long-term financial goal by generating money with a consistent return.
• Liquidity- There is enough number of buyers and sellers in the blue-chip stocks. When investors want cash, it becomes simpler to sell their securities due to enough liquidity.
• Timely Payment- Blue-chip stocks pay dividends regularly. That is the main reason why blue-chip firms or investors are considered to be the finest investment.
If you do not have an account and wish to open one, visit the following links.
To open your account in Zerodha
To open your account in Angel Broking
To open your account in Alice Blue