Investing In Blue Chip Stocks
You have to buy shares of companies that are selling at a discounted price. Among the best options are blue chip stocks, which are shares belonging to the most stable companies. These companies have little volatility, high volume of hiring and moderate increases over time. They are large, prominent companies with a large history of dividends.
Blue chip stocks represent the shares of companies that are highly recognized, since they have a solid and stable financial position. Here are some stocks considered blue chips: banks, electric companies, telephone operators, self-service department stores.
In general, they sell high quality products and services and are widely accepted across the world.
Investing in blue chips is considered less volatile since these companies are generally in an excellent financial state and have a very good market capitalization. This allows it to withstand the onslaught of financial crisis or turbulence better than other companies. They have very good liquidity, have a good rating from risk rating agencies and has a long track record in paying dividends to shareholders.
Advantages of Investing in Blue Chips
Among the main advantages of adding some blue chip stocks to your portfolio is that they are large, prominent consortium’s with a healthy balance sheet and financial resources that allow them to withstand crises better than others.
They have a high liquidity so that you can enter and exit them quickly. They provide basic services, they have well-owned brands in the minds of consumers and they pay you dividends usually 4 times a year on a quarterly basis, thereby ensuring a kind of fixed income on all 4 quarters of the year. By investing in blue chip stocks , you not only have the right to dividends but you become a member of the company. You are a shareholder of that company since you own a part of it. As a shareholder you can go to the assemblies and vote at meetings. Not only are you an investor, you become part owner, no matter how small it may be.
In general, when it is said that a company is a blue chip stock it means that it is a quality company, and of a large size , or at least of a certain size.
Small quality companies are not called blue chip, although some of them may be more profitable and safer investments than larger ones. Blue chip is a concept that is associated with low risk . Investors who invest in blue chips know that probably none of their companies will be the most profitable. But they also know that these stocks won’t lose them a ton of money. Less risk/less reward.
A neat little fact before we finish off the article; the term blue chip stock came from the casinos! In the casino, the blue chips are often the biggest and the best, hence the name blue chip stock