If you’re wondering about what are blue-chip stocks, this article is all you need. We’re here to answer all your questions regarding these and tell you about who should invest in them.
Think of the blue betting disks in the game of poker; they have the highest value while the white one is the lowest. Blue-chip shares are like these disks, highly valuable. These are shares of prominent and well-recognised organisations. These corporate giants have an extensive history of sound financial potential and performance. The stocks are well known to have the ability to withstand adverse market conditions, besides fetching sizeable returns in optimum market conditions.
Typically, investor portfolios of blue-chip stocks will comprise of the ones who are called the ‘big boys’. Known for their asset size and influence over economic and (sometimes) geopolitical situations, these companies tend to make headlines around the world.
There are several parameters that help first-time investors identify blue-chip stock companies. For instance, they include consistent annual profits over a long time, considerably large market capitalisation, and a well-balanced debt-to-equity ratio. These companies are also less vulnerable in the face of fluctuating market volatilities.
More often than not, blue-chip stocks represent lucrative investment opportunities and high generate returns for investors. Investors are usually safeguarded from market recessions, inflation, and economic downturns. These companies also tend to be able to offer regular dividends to investors and shareholders, thereby helping them earn a stable income. To sum it up, a stable and secure financial standing coupled with a soaring growth rate often make these stocks a high-ranking investment choice.
If you are wondering who should invest in blue-chip stocks, keep reading to find out more. Any investment requires research. Preferably, a thorough knowledge of financial markets and considerable time spent tracking the market behaviour are a must.
Ideally, the investment horizon of an individual keen on investing in blue chip stocks should be in the range of 5-6 years. These stocks are one of the most suitable investment choices for investors due to their capability of fetching high returns and regular dividends.
People are drawn to these stocks due to their reputation as impeccable track record, excellent current performance, and overall stability. Now that you know blue chip stocks meaning and the companies which define them, you should have some of these in your portfolio. It’s difficult to ignore the fact that companies holding these stocks have a sound record of credibility and financial stability over a notable time, these stocks are sure to make a worthy addition to your well-diversified investment portfolio.