Blue-Chip Stocks: Definition, Risks, Examples

Blue-Chip Stocks: Definition, Risks, Examples

Just to put things into perspective, Chevron reported positive cash flows for 2020, even after oil prices plunged due to the pandemic. First and foremost, they help diversify your portfolio and reduce the overall beta. In the event of a meaningful market correction, these blue-chip stocks protect from capital erosion. Take control of your financial future with information and inspiration on starting a business or side hustle, earning passive income, and investing for independence. Liabilities And DebtsLiability is a broad term that includes all the money or financial obligations the company owes to the other party.

A proven track record and strong reputation with consumers and shareholders. Sign up and we’ll send you Nerdy articles about the money topics that matter most to you along with other ways to help you get more from your money. Blue-chip stocks are in major market indexes like the S&P 500, the Dow Jones Industrial Average and/or the Nasdaq 100.

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Blue chip companies are financially stable business entities. Since these organizations have a large market capitalization, superior reputation, and strong performance record, they are extensively safe for investment. MarketBeat empowers individual investors to make better trading decisions by providing real-time financial data and objective market analysis. Consistent performance, solid balance sheets, and the opportunity to collect dividends should be enough to convince you that blue chip stocks have a place in your portfolio.

blue chip company list

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The Hershey Company (NYSE:HSY)

Finally, the very stability of blue chip stock prices can be seen as a downside to some investors. Slow and steady growth is a boon to a buy-and-hold investing strategy, which focuses on long-term growth. However, people who aim to earn a quick profit by trading their shares are less likely to benefit from investing in blue chips. There’s also no official list of blue chip stocks, but they are an elite group.

Data shows that the average lifespan of an S&P 500 company has dropped from 61 years in 1958 to less than 20 years more recently. Companies that were once dominant giants are more vulnerable to change than ever before. If sales have started declining or profitability has stalled, you need to determine if the factors causing those results are temporary or the start of a long-tailed headwind. • Rethinking Retirement is an editorial collection with stories that will inspire and provide the foundation for planning a different type of future than the 9-5 life allows.

Plant Nutrient and Renewables had strong second quarter results and the Trade Group’s result improved significantly after a difficult first quarter. Trade Group reported pre-tax income of $23.7 million leverage and margin compared to $4.7 million in the previous. We don’t like the idea of using poker analogies for investing. With that said, the term “blue-chip stocks” has stuck for a select group of stocks….

Examples of blue chip stocks

Analyst consensus is the average investment recommendation among Wall Street research analysts. Get stock recommendations, portfolio guidance, and more from The Motley Fool’s premium services. Pays dividends to shareholders and regularly increases its payouts. Neither the author nor editor held positions in the aforementioned the best online brokers 2020 investments at the time of publication. Whether you’re buying blue-chip stocks or not, building a portfolio out of individual stocks takes time and research. Credit cards, debit cards and prepaid cards are mainly the product of financial services corporation Visa, which was founded by Bank of America in 1958.

  • There might be an even better entry point six months down the road.
  • With that said, blue chip stocks deserve a place in every portfolio.
  • Kirsten Rohrs Schmitt is an accomplished professional editor, writer, proofreader, and fact-checker.
  • While the data and analysis Stash uses from third party sources is believed to be reliable, Stash does not guarantee the accuracy of such information.

By reinvesting those dividends you would buy 22.66 new shares without having had to add any of your own money. Coca-Cola particularly stands out for increasing its dividend. Its streak of consecutive annual dividend payment increases dates back to the early 1960s, a track record placing it among the top 10 dividend stocks on the market. NerdWallet strives to keep its information accurate and up to date.

Best Blue Chip Stocks

Blue chip shares are a safe option—they can survive tough market cycles. These stocks are included in the investment portfolio to mitigate risk. According to legend, blue chip securities are named after the highest value chips used in the game of poker.

  • Revenue was higher by 37.3% to $10.9 billion, which was $50 million more than expected.
  • The other way is to invest in them indirectly through index funds and ETFs as explained above.
  • Consumer Packaging revenues grew 65.6% to a segment record $990.1 million, due once again in large part to the purchase of Ball Metalpack that closed in the fourth quarter of 2021.
  • Hence, in our pre-built screener, it gets a score very low GMR score.
  • Investopedia requires writers to use primary sources to support their work.

During recessionary periods, a blue chip company is often less impacted by adverse economic conditions. For example, Coca-Cola is a blue chip company that might not suffer from a recession because many choose to drink its products, regardless of economic conditions. Blue chip companies are known to have very stable growth rates. So, their stocks are considered to have less volatility than other companies that are not well-established. Nevertheless, shares of any company can take a hit and lose their blue chip status. Blue chip stocks are shares of companies that you’ve definitely heard of.

Investing in individual blue chip stocks

Blue chip stocks that are well-positioned amid the ongoing financial climate and have positive analyst ratings have been included in the following list. Hedge fund sentiment has been used as a qualifier for the popularity of each stock. These index funds deliver the crucial ingredient of diversification. Rather than tying your fortunes to one or two major companies, your money has a chance to benefit from a wide range of businesses that sell and serve different market segments. Rather than trying to pick single companies to invest in, index funds allow investors to buy into many companies at once.

As economic activity trends towards potential GDP, the banking sector is likely to benefit with growth in the core banking business. Freeport-McMoRan is also attractive with copper emerging as a key investment theme. Be it electric cars or renewable energy, the application of copper is likely jpmorgan’s blockchain payments test to increase in the coming decade. The company seems well positioned to benefit from this tailwind. An important point to note is that for 2021, Pfizer expects revenue of $33.5 billion from the Covid-19 vaccine. The company expects to deliver 2.1 billion doses of the vaccine through the year.

They are Expensive Stocks

AMZN stock has been another underperforming name among blue-chip stocks in 2021. However, there is no doubt that the stock is likely to remain in a long-term uptrend. It’s also worth noting that the first rate-hike after the pandemic is likely to occur in 2022.

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