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.
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:
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:
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:
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:
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:
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.
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