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Insights about blue-chip stocks. What is it? Is it safer to invest in them? And what is there worth?

Insights about blue-chip stocks. What is it? Is it safer to invest in them? And what is there worth?


The term blue chip stock was first coined by Oliver Gingold, who worked for Dow Jones in 1923. He noticed that several stocks at the stock market are trading at $200 or more per share. He named them Blue Chip Stocks. These were high-priced stocks that were traded on the stock market. But now they are more commonly used for high-quality stocks which give you more dividends and stay stable in the long run.

The blue-chip stocks are considered to be the premium stocks as they have a high value. Its name commands financial stability, long-term growth, a strong track record, and even prestige with it. All the positive characteristics come with the world's top companies and who perform excellently.

The blue-chip stock could be any top stock from the market who is consistently performing well and has a high price share. Dow Jones put up the 30 stocks in their Dow Jones Industrial Average stock list. Following here are some interesting answers to your questions related to Blue-chip stocks and how they perform and how you can invest in them.


What are Blue Chip Stocks?


Blue Chip stocks are the markets best and quality stocks who perform consistently good in the share markets during ups and downswings in the market. The financial investors hold them in high regard for the investment. Blue-chip stocks have shown the following characteristics over the years ;

Business and Financial stability: The Blue chip stock businesses have low Financial debt, They get a strong Credit rating from different reliable or standard credit rating firms and generate plenty of cash.Distinctive business growth model and economics: The Blue Chip Stock Company has an excellent Business growth model and Expands its business regularly and generates good cash flow for the firm.Experienced and Reputed Management: These companies have Reputed and Experienced Persons on their Board Which handles the company's business efficiently.Expansion or growth over the long period: They perform well in the longer term and have promising growth.Great performing stock over the stock market: These stocks perform exceptionally well and show a rise in their value in a longer period. Large share market capitalization: Blue Chip stocks companies have a large share market capitalizations and backed by having plenty of investors.

These are some of the characteristics of blue chips, while one or two of them are missing but most of the traits are mentioned here on which a blue-chip stock can be examined. During the market financial crisis or the recession, the stocks can struggle or give fewer dividends. But over the longer period, blue-chip stocks have a good reputation for generating high profits for their investors.


What makes a Blue-chip stock a good investment?


There are certain parameters for stock or company to be qualified as a Blue-chip stock. Blue-chip stocks are the stocks of the well-established companies who are doing business more 5-10 years in a thriving growth pattern. Most of these stocks generate stable returns for investors. Due to this consistency investors get protection from markets ups and downs and recessions, inflation. These companies register constant annual growth returns over extended periods with a stable debt-to-equity ratio. These blue-chip companies perform well on average return on equity of the investors. Blue-chip companies give regular dividends to their shareholders and help them to make a consistent source of income. They give average annual returns up 10% on Blue-chip company stocks Some also go up to 20-25% in certain cases. A strong business model, a Reputed managing board, an excellent balance sheet, and a good financial position makes a company blue-chip stock a worthy investment.


Who should buy Blue chip Stocks or invest in them?


The blue-chip stocks have a superior edge on the other stocks in the market as they give higher dividends on investment and stability. And it works on the company's goodwill. Such stocks are safer for investors in tackling the risk behind any investments.

Blue chips stocks are a great choice for the small and beginner level investors who have little information about the market fluctuations and their working styles. Their business is already familiar to the people and makes easy to analyze them. New investors can start investing in blue chips with limited knowledge with buying index funds, mutual funds or insurances or best blue-chip listed companies shares. It will make simple for the investor to capture growth in the market without the skill and time required for stock trading.


Risks and Returns on Blue chip stocks.


Blue Chip stocks are considered a safer investment as they perform well during the recession or financial crisis, the economic downturn and are not highly volatile. They show moderate or slow growth during this period. You should diversify your investment to avoid risks. Expect a steady income from your blue-chip stock during a recession but when there is an economic boom this stocks will pay you hugely on investments made by you.


What Are the Names of Some Blue Chip Stocks?


Despite there is no definition or a universal agreement on what makes a stock as blue-chip stock but here are some of the list of blue-chip stocks for you. The Dow Jones industrial average produces the list of top thirty blue-chip stocks lists you can also have a reference from there.

3M

American

Express

AT&T

Berkshire

Hathaway

Boeing

Chevron

The Clorox Company

The Coca-Cola Company

Colgate-Palmolive

Diageo

Exxon

Mobil

General Electric

The Hershey Company

Johnson & Johnson

Kraft Heinz

McDonald's Corporation

Nestle SA

Pepsi-Co

Procter & Gamble

United Technologies

Visa

Wal-Mart Stores

These are some of the examples of blue-chips stocks.


Financial goals and Conclusion


Blue-chip stocks are ideal for new investors or who want a safer investment portfolio for there investments. These stocks are meant to be for long term investments and give you constant returns. They moderately get affected by the market behavior, so on you, it's less to worry. Mostly you should choose a blue-chip stock based on the future perspective of growth as it should have less price it tends to grow and give you greater returns. Blue-chip stocks are considered as a safer and smart choice. Before buying the stock get a sound knowledge of the stock so it will work by your side in the good and bad times of the market. Best Luck for investing.


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