Blue-chip stocks refer to shares of well-established, financially sound, and reputable companies. These companies have a history of stable earnings, reliable growth, and often pay dividends to their shareholders. The term comes from poker, where blue-chips hold the highest value.
Blue-chip stocks can be characterised by:
Stability
These companies have a long track record of stability and performance, making them less volatile compared to smaller companies.
Dividends
Many blue-chip stocks pay regular dividends, providing a steady income stream for investors.
Market leaders
Blue-chip companies are often leaders in their industries, with strong brand recognition and a competitive edge.
Some well-known blue-chip companies include Apple, Microsoft, Coca-Cola, and Johnson & Johnson. These companies have proven their ability to thrive in various market conditions and are trusted by investors worldwide.
For new investors, blue-chip stocks can be a great starting point. They may offer a balance of growth potential and stability compared to more speculative investments. Additionally, regular dividends can provide a source of passive income.
Blue-chip stocks are a cornerstone of a well-diversified investment portfolio. By investing in these reliable and established companies, new investors can build a strong foundation for their financial future.
CommSec Learn is intended to provide general information of an educational nature only. Any securities or prices used in the examples given are for illustrative purposes only and should not be considered as a recommendation to buy, sell or hold. Past performance is not indicative of future performance. Investing carries risk.