- Blue-chip stocks belong to companies that have large market capitalisation.
- These stocks are generally considered safe since they have a stable financial record and credibility.
- These companies are also known to disburse attractive dividends.
Blue-chip stocks belong to companies that are stable and well-recognised and have significant market capitalisation. These highly priced market stocks are generally considered safe since they have a sound financial record and credibility.
In addition, these companies are also known to disburse attractive dividends. These are a few reasons why these stocks are popular with investors. However, before investing in blue-chip stocks, investors must know about some key details.
Source: ©Webking | Megapixl.com
From where did blue-chip stocks derive their name?
The term ‘blue-chip’ was first used to describe high-priced stocks in 1923. In poker game, the blue chips having more value than both red and white chips.
Key features of blue-chip stocks
- Most blue-chip stocks provide regular dividends to their investors. So, these stocks are a source of steady and safe returns.
- Due to strong financial backing, these stocks enjoy high creditworthiness.
- They have lesser risks associated with them.
- These are good for long-term investments.
- These stocks observe steady growth over time.
Reasons for investing in blue-chips
- They offer high and regular returns.
- Investment in such stocks helps in better corpus building.
- These stocks facilitate diversification of portfolio.
- Blue-chip stocks are known to cushion the impact of inflation, recession, and economic slowdown.
Source: © Ptlee | Megapixl.com
READ MORE: Why Do Markets Not React Much To GDP Data?
- Blue-chips stocks are known to give regular dividends to investors.
- These stocks are ideal for meeting long-term financial goals.
- Their high creditworthiness makes them an attractive investment option. It makes these stocks relatively more liquid than other investment options.
Despite all the advantages, blue-chip stocks are still prone to volatility. So, investors must adequately do their homework before investing in them.