What Are Blue-Chip Stocks? Why Are They So Famous?

What Are Blue-Chip Stocks_ Why Are They So Famous_

Blue-chip stocks are shares of big companies which are known for their long history of sound financial performance. These companies can typically endure harsh market conditions and offer high returns in good market conditions. Of course, the blue-chip stock usually costs high, as it has an excellent reputation. Moreover, blue-chip companies are often among the top three companies and market leaders in their industry.

Here is a list of well-recognized US blue-chip stocks:

Symbol NameCompany NameMarket Cap
BACBank of America359.03B
BABoeing Co120.99B
IBMIBM Corp107.47B
JNJJohnson & Johnson428.95B
AXPAmerican Express124.45B
NKENike 267.35B

What makes a stock blue-chip?

There are no specific criteria for the stocks to be considered blue-chip stocks. However, most blue-chip stocks have the following characteristics:

Market capitalization. Blue-chip stocks are mainly large-cap stocks, and the total value of their shares is usually $10,000 billion or more. 

Dividends. Even though not all blue-chip companies pay dividends, most of them do. Because blue chip companies usually have minimal debt and excellent cash flow, they can return some percentage of this cash flow to their investors through dividends. 

Growth history. Blue-chip companies have a good record of sustained growth. They may not have a rapid increase like fast-growing tech stocks (because they are already established), but they have a continuous positive increase in earnings. 

Reputation. Blue-chip stocks have an excellent reputation, and one can easily find these stocks from the list of major market indexes like the S&P 500, the Dow Jones Industrial Average, and the Nasdaq 100.

Longevity. Blue-chip companies can survive in difficult market situations like crises, inflation and etc. Moreover, they have been in their business for already long time. 

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