What are blue chip stocks?

If you’ve ever looked into trading the stock market, you may have heard of blue chip stocks. They are stocks in companies that are financial stable with consistent profits and dividends.

The term “blue chip” comes from poker, blue poker chips have the highest value.

Blue chip stocks are often considered to be a relatively safe bet when trading stocks. Volatility is likely to be lower than stocks in companies that are not as financially stable, such as new start up companies.

Some of the most widely known blue chip companies include:

Exxon Mobil
Mcdonalds Corp
Hewlett-Packard Co.

Advantages of blue chips:

Relatively low risk investments
Usually pay consistent dividends
Ideal for retired investors who don’t have the desire to take big risks with their money

Disadvantages of blue chips:

The returns are likely to be conservative
The shares are quite expensive to buy in some blue chip companies

If you want to purchase blue chip shares, you will need a stock broker.