What are blue-chip stocks? Definition, risks, examples - Business Insider

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What are blue-chip stocks? Highly reliable stocks from well-established companies that can add strength and safety to any portfolio

Taking their name from the most valuable poker chips, blue-chip stocks represent the highest-quality companies trading on the market.A blue-chip stock is a stock from the market's highest-quality companies, known for their low risk and reliable performance.

Blue-chip stocks are stable and pay high dividends, but they are typically expensive and don't grow much. Blue-chip stocks belong in any well-diversified portfolio, though they tend to be favored by older or more conservative investors.Investing sometimes gets compared to gambling — something prudent investors and financial pros deny, naturally. But the stock marketJust as blue chips in poker hold the highest value, so do blue-chip stocks in the stock market. They represent the crème de la crème of equities — the biggest, richest companies. Many of them are household names.

Blue-chip stocks provide a way to invest in stable, good-performing corporations with minimal risk. Plus, they usually pay good dividends.Blue-chip stocks occupy the most venerated strata of the stock market. As leaders in their industries, these companies have strong histories — some are over 100 years old — and deliver consistently strong performance. Whether the market overall is up or down, blue chips prove themselves as steady and reliable investments.

The blue-chip term came into financial parlance in the early 1920s. According to Wall Street lore, it was coined by a journalist for Dow Jones, Oliver Gingold, as he watched a stock tape ticker reporting trades of shares valued at $200 or more. He promptly dubbed these companies "blue-chip stocks."No official guidelines exist around the size and value of blue-chip companies. But they do share some characteristics:: Blue chips tend to be huge, well-financed corporations.

 

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I thought it was stocks of companies who do the biggest buybacks.....

lol in 2007 all the banks were blue chip stocks

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