Blue Chip Stocks Definition: Day Trading Terminology
Have you ever wondered what a blue chip stock is? Maybe you have invested in the stock market before but never really took the time to learn about these popular stocks? If so, you have come to the right place.
Today, we are going to learn what a blue chip stock is and how they can benefit you.
What Is a Blue Chip Stock?
When someone refers to a stock being blue chip, they are describing a stock that has certain qualities. First, a blue chip stock has to be issued by a company that is large in size and profits and has a long history of turning a profit. Many of these stocks have also been around for many years and are considered a “mature” company. These stocks are well-known and trusted by millions of investors from around the world.
Blue chip stock companies are often worth billions of dollars and managed by highly intelligent and famous CEO’s. These companies are leaders in their respected industries and are often household names. Most blue chip stocks offer dividends to their investors which is always a plus when investing.
Examples of Blue Chip Stocks
Some of the blue chip stocks that you will find being traded on the market include Exxon Mobil ($XON), a gas and oil company that is known around the globe, 3M ($MMM), a company that produces many different products, and Caterpillar ($CAT) which manufactures heavy machinery. Each of these stocks has been around a long time and have proven themselves as a reliable company with steady dividends.
The above weekly chart is of $CAT for the past 10 years and as you can see has provided steady returns not to mention the dividends it pays out regularly.
In this weekly chart above we have $MMM which has been one of the better performing blue chip stocks that also pays a dividend.
While you will have to spend a lot of your hard-earned cash to purchase a share, owning these stocks have historically been well worth it. But like any stock, you will need to do your homework and find ones that fit your personal investment needs.
Now that you know more about blue chip stocks, why not invest in a few? They will make great additions to your portfolio and they often make excellent long-term investments. Many of the world’s billionaires have large portions of these stock in their collection and have been holding onto them for many years.
They’re not only a great investment, but as you have learned, many of them pay high dividends. While these stocks are probably not for those looking to turn a quick profit, they will help you grow your wealth over time.