Blue-Chip Stock

Definition

Blue-chip stocks are shares of large, well-established, and financially sound companies that have operated for many years and have dependable earnings. The term originates from poker, where blue chips hold the highest value. Blue-chip companies typically have market capitalizations in the billions, are leaders in their industries, are components of major indices like the Dow Jones Industrial Average, and often pay consistent dividends. Examples include Apple, Microsoft, Johnson & Johnson, and Coca-Cola. Blue-chip stocks are considered relatively safe investments that provide steady growth and income, though they are not immune to market downturns. They form the core of many conservative investment portfolios.