Kalkine Media explores 5 blue-chip stocks to watch this quarter

Blue chip stocks are named after the poker chips with the highest value. Of all stock investments, blue chips are thought to be the safest with little erratic movement. These stocks usually boast not only sound fundamentals but sound management teams too. While returns may be measured when compared to stocks of lesser established companies, they may reduce the risk of a portfolio.

An in-depth look into the company's annual and quarterly reports is merited. Look for patterns. Has the company consistently been raising its dividends, revenue and profits? Also, look for trends in the industry and sector. Many blue chips may have near-monopoly grasps but see if there are any close competitors and compare them. Study the industry to see what developments are expected in the near-to-medium term. Compare the company with others with similar market caps from other industries to give yourself options. Lastly, taking note of the fundamentals of the company is a must.

In an equity market, this goes without saying that investment is not risk-free. However, the risk may vary from low to high. For example, penny stocks are considered high-risk investments, and blue chip stocks fall under low-risk stocks. Blue-chip stocks are companies with massive market capitalization. They are considered safer than other stocks because it is assumed that the company has the strength to stay strong during times of financial crisis due to huge market capitalisation.

A stock becomes a blue-chip stock if a company has a massive market capitalization. For example, in Canada, stocks of companies with a market cap of C$ 30 billion or more are considered blue-chip stocks. A blue-chip stock is well-reputed in the market and is known for its dependable earnings and dividend payouts. Generally, blue-chip companies are market leaders and well-known across the world.

Blue-chip stocks are often considered safe havens for investors with a low-risk appetite. Blue-chip stocks are often known to provide stable returns and, hence, can be an ideal option for long term investing. Another point to note is that blue-chip stocks commonly pay steady dividends and increase dividend rates frequently.