What Qualifies a Company as Blue Chip?

If you want to add a big-name, established company to your portfolio it’ll cost you. Blue-chips are in high demand and are therefore expensive to buy compared to smaller companies. Now we’ve covered the pros of urban dictionary investing in blue-chips, it’s worth knowing that there are also drawbacks to be aware of. Because of this, blue-chip shares often deliver steady, reliable returns – especially when held over the long-term.

• The simplest sets of poker chips include white, red, and blue chips, with American tradition dictating that the blues are highest in value.
• Investing in the stock market by choosing individual stocks takes time and expertise, and research shows it doesn’t even boast a track record of beating index funds over time.
• Moreover, Exxon raised its dividend by 3% in the fourth quarter, and thus it extended its dividend growth streak to 40 years.

But Berkshire also owns a diverse set of businesses such as restaurant chain Dairy Queen, railroad giant BNSF, and its Berkshire Hathaway Energy utility company. With such a broad range of businesses, the company has a reputation for safety and security, as well as consistent performance. Apple (AAPL 1.51%) is one of the most profitable companies in the world, and it has pioneered advancements in the technology sector throughout its history. The company innovated with its Macintosh computers in the 1980s, made media portable with its iPods in the early 2000s, and its iPhones, iPads, and Apple Watches are ubiquitous today. In a world where consumers flock to the latest tech fads, Apple’s products engender notable loyalty from its customer base. Blue chip companies have reputable brands that have been built and maintained over many years.

How to Invest in Stocks – From A to Z

The name “blue-chip” is said to be a reference to the game of poker, in which the blue-colored chips are worth more than the others. So if you’re looking to invest in some top-quality shares, you may not have to look any further than blue-chip stocks. They’re usually well-known companies that stand out from competitors in their industries. Investing in one of these blue-chip stocks will usually be less stressful for the risk-averse investor. The investing information provided on this page is for educational purposes only.

We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters. The Morningstar fair value estimate represents what Morningstar analysts think a particular stock is worth. Fair value estimates are rooted in the fundamentals and based on how much cash we think a company can generate in the future, not on fleeting metrics such as recent earnings or current stock price momentum. Learn more about how Morningstar values stocks in Morningstar’s Guide to Stock Investing. Back in 1923, Dow Jones employee, Oliver Gingold, described high value stocks as ‘blue chip’ stocks. That’s because blue poker chips had a higher value than red and white chips.

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Short-term traders are unlikely to see drastic day-to-day movements in the price of a blue-chip stock because of its relatively stable market capitalisation. The risks of loss from investing in CFDs can be substantial and the value of your investments may fluctuate. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how this product works, and whether you can afford to take the high risk of losing your money.

Click here to instantly download your free spreadsheet of all 350+ Blue Chip Stocks now, along with important investing metrics.

Best-Performing Blue Chip Stock #3: Valero Energy Corporation (VLO)

The increase in net interest income was primarily due to an increase in the interest rate spread of 28 basis points. Washington Federal’s net interest margin was 3.51% in the second fiscal quarter of 2023 compared to 3.69% for the quarter ended December 31, 2022, and 2.90% for the prior year quarter. One of the most famous blue-chip indices is the Dow Jones Industrial Average. This index tracks 30 major blue-chip companies in the US, including Apple, General Electric and Walt Disney.

Yet today, Apple remains the largest public company — and the business still has plenty of room for growth over the long term. If a stock is considered blue chip, it is generally the market leader or one of the top performers in its sector. Typically, a blue chip stock is a component of major stock market averages and indexes, such as the S&P 500 index in the United States. In fact, it could even be argued that a U.S. stock must be a member of the S&P 500 in order to be a blue chip. There are several well-known and well-capitalized companies that are not yet well-established enough to qualify as blue chips.