The term Blue Chip Stock was coined by Oliver Gingold in 1923, derived from the world of poker, where blue chips are of the highest value. These refer to the highest quality and most reputable shares in dominant, secure companies; investing in these ‘large capitalization’ companies has historically proven to deliver the most profitable results in the stock market. Almost all of these are now at the top of the world. Take a look below to find out more about the advantages and disadvantages of investing in these stocks.
How to identify Blue-Chip Stock companies
Before you start investing, you need to know how to identify a Blue-Chip Stock company. There is no particular way to tell them apart since all companies have different characteristics, but there are some aspects to look out for. The most obvious trait is that they’re the largest companies available in the stock market, for instance, Nike, Coca-Cola, Walmart, Johnson & Johnson, Airtel, Disney, etc.
They have a high and stable track record and earning, spanning over decades, acquiring and influencing a million other business. They have a long, steady record of dividend payments to their shareholders, however increasing the amount regularly either equal to or above the inflation rate, so the stockholder’s gradually earn more than they would with smaller companies. In this way, Blue-Chip Stock companies ensure constant investors.
These companies are internationally recognized as ranking higher than standard businesses in the global stock market. The revenue generated is, thus, also of the highest profit. Bonds issued by them are considered at the very top of the investment grid.
How to build wealth through Blue-Chip Stocks
One investment strategy is to identify the companies with the most frequent dividend payments increases and the dividend’s stability. Some companies are more established than others, some have more potential for growth, and some have more risks of bankruptcy and collapse (e.g. Sears). Make your investment choices wisely, while always keeping in mind your own investing strategy.
Interesting Blue-Chip Stocks for 2018
- Amazon: If you’re aware of the goings on in the stock market, you would know that this company has made around $2 billion this year, and only going up. Amazon’s investment and collaboration with several other companies promise a strong increase in future payments as well
- Walt Disney: Disney taking over Pixar Animation Studios and the Marvel Cinematic Universe not only boasts a huge influential increase and great promise and security for investors. Furthermore, Disney is selling stocks at an incredibly discounted price as of now, owing to the Disney Resorts and Disney Channel Television group. Its market value stands at $155.1 billion.
- 3M: Recognized worldwide for its diversity in products, ranging from office supplies to healthcare products, this company has a market value up to $119.8 billion. Even more promising is the fact that the company’s dividend value has been increasing annually since 1977.
- Johnson & Johnson: With a market value standing at $331.8 billion, the company predicts a good year of growth after getting steady increases in earning in 2017. Investors are offered advantages such as pharmaceuticals, consumer products, and medical devices.