Debt Dictionary

Blue Chip

Investment Dictionary -> Blue Chip

This article offers an explanation of the term Blue Chip Stock. The phrase was invented by Oliver Gingold of Dow Jones in 1923 or 1924. The blue chip term, for example, comes from poker where the highest and most valuable playing chip is the blue one. This definition is used for stocks of recognized and financially sound firms with high brand name recognition. They have stable earnings and no extensive liabilities. This type of companies has demonstrated its capacity to pay dividends in times of growth and decline. They also have various product lines and a strong customer base. These stocks usually carry less risk than other types of stocks.

Blue chip stock demonstrates a combination of high credit rating and stable earnings power. It is qualified as a less unstable investment in comparison to the ownership of shares in firms without this kind of status. In general, blue chip has been institutionalized as a status. Investors usually purchase blue chip companies with the aim of securing sustainable growth of their portfolios.

The blue chipís stock price typically reflects the S&P; 500. It typically offers a diverse basis for revenue creation. ?he majority of the firms included in the Dow Jones Industrial Average may be referred to as blue chip stock companies. It should be noted that blue chip stock is not confined to the Dow stock. The blue chip covers all publicly traded stock of major international firms that are listed on the foreign stock market. It is often found in conservative investors and retirement portfolios. The "Dow" covers the 30 largest publicly held companies in the USA. Among the included firms are Coca Cola, American Express, IBM, General Electric, and Walt Disney. If you purchase shares of these companies, you can be absolutely sure that youíll receive a return on your investments.

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