Blue chip stocks
Investing in well-established companies can be a good strategy for long-term performance and regular dividends.
What are blue ship stocks?
Blue chip stocks are huge, well-established companies with popular brands and products like Apple, Amazon and Coca-Cola. These companies often have a market capitalization of billions of dollars or even trillions, are financially sound and have been around for decades. Some blue chip companies distribute dividends, another reason investors flock to their stocks.
- Blue chip stocks represent the largest and most well-established companies with recognizable brands.
- Companies with a market cap of over $200 billion USD are typically considered blue chip stocks companies.
- Blue chip companies often distribute dividends to investors.
What are America’s blue chip stocks?
There’s no official blue chip stocks list, but the Dow Jones Industrial Average, which lists 30 prominent companies, is a good place to start. These companies are often regarded as some of the country’s most valuable and reliable heavyweights.
However, many others listed on the New York Stock Exchange or the Nasdaq would also qualify as blue chips.
The FAANG stocks — Meta (formerly Facebook), Amazon, Apple, Netflix and Alphabet (Google) — is one of the most popular groups of blue chip stocks that dominated the tech sector in the past 15 years. Other tech blue chip companies include:
Banking and financial services
Companies in the financial sector make up a portion of the blue chip classification. These companies tend to have a history of providing large dividends and include the major banks and credit card companies, including:
The products and brands that many Americans across generations have grown up knowing sustained growth and success, including:
Oil, gas and mining
As drilling and mining is a cyclical industry, natural resource companies have the potential to provide high capital growth. But these can have a reputation for underperforming when the mining industry experiences a downturn. That said, companies that have diversified businesses firmly established across the nation include:
Retail and restaurants
Retailers tend to offer medium-sized dividends to shareholders and are popular choices among investors. Also, popular restaurant chains have loyal followings that provide consistent profits. Blue chip stocks in this sector include:
Blue chip exchange-traded funds (ETFs)
An ETF is a fund that holds a basket of stocks. In this case, a basket of blue chip companies. The cool thing about ETFs is that they trade like stocks and you can buy them from any brokerage or a trading platform. This provides instant diversification to your portfolio without much effort.
Here are some popular blue chip ETFs:
- SPDR Dow Jones Industrial Average ETF Trust (DIA). An ETF that tracks the 30 blue chip companies in the Dow Jones
- SPDR S&P 500 ETF Trust (SPY). An ETF that tracks the S&P 500 index, which includes stocks from the 500 largest publicly-traded companies in the country.
- Invesco QQQ Trust Series 1 (QQQ). An ETF that tracks the NASDAQ 100, a tech-leaning index holding stocks from 100 of the biggest NASDAQ-listed companies.
- ProShares S&P 500 Dividend Aristocrats ETF (NOBL). An ETF of 50 companies that have increased their dividends every year for more than 25 years
Why are blue chip stocks popular among investors?
Many successful long-term investors like Warren Buffett have advocated for investing in companies you believe will be around for a generation or two. The kind of stocks that tend to fit that description are the blue chips that continue to show steady returns. This may translate to consistently higher stock prices and consistent dividend payouts.
It’s a versatile combination that allows you to either reinvest those dividends and compound the earnings over time or take the dividends as a stream of passive income. On top of that, holding investments for the long term also has some significant tax advantages.
As for intangible benefits, investing in a company you can rely on for the long haul takes away much of the anxiety or worry an investor feels about a volatile stock market.
How to buy blue chip stocks
- Choose a stock trading platform. The right platform will depend on your needs and investing experience.
- Open your account. You’ll need an ID, bank details and Social Security number.
- Confirm your payment details. You’ll need to fund your account with a bank transfer.
- Find the stock you want to buy. Search the platform and buy your shares.
Our top picks for blue chip stock trading platforms
- Easy-to-use platform
- Low fees
- Student and young investor discounts
- Access to international stock exchanges
- Low margin rates
- Powerful research tools
- $50 in free trades
- Low commissions
- Easy-to-use app
Compare more stock trading platforms to buy blue chip stocks
Frequently asked questions
More on investing
Your guide to how ETFs work and whether this type of investment is right for you.Read more…
Learning how to read stock charts and recognize chart patterns can unlock your success as a trader.Read more…
Owning a stock means you own part of a company and can potentially grow your wealth. But there is a risk of loss.Read more…
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