Blue Chip Stocks Explained


The stocks of well-known, high-quality businesses that are market leaders are known as blue chip stocks. These businesses have endured and are regarded with respect by shareholders and customers alike.

Illustration of the characteristics and logos of well-known blue chip stocks, such as Coca-Cola, Walmart, Disney, and others. The Motley Fool’s blue chip companies have proven business strategies and impressive investor returns. Blue chip stocks are among the most popular choices for conservative investors because of these returns, which frequently include regular and growing dividend payments. Blue chip stocks, on the other hand, could be a good option for risk-averse investors looking to diversify their portfolios and provide some stability in turbulent stock market conditions.

What exactly are blue-chip stocks, then? A security that represents an equity position in a company that possesses the majority of the following characteristics is referred to as a blue chip stock.

Investing in Blue Chip Stocks Blue chip stocks are the stocks of high-quality, well-known businesses that are industry leaders. These businesses have endured and are regarded with respect by shareholders and customers alike.
Play Video Even if you have never invested in the stock market before, you will be familiar with the names of a lot of the best blue-chip stocks. These large-cap companies offer goods and services that are used by billions of people worldwide every day. The following are a few of the industry’s finest blue chip firms:

1. NASDAQ: Apple Apple AAPL) is one of the world’s largest businesses and has pioneered technological advancements throughout its history. In the 1980s, the company came up with the Macintosh computer, made media portable with the iPod in the early 2000s, and today, the iPhone, iPad, and Apple Watch are everywhere. Apple’s products have a significant amount of customer loyalty in a world where consumers are drawn to the newest tech trends.

Through its iTunes, App Store, and streaming television businesses, Apple also generates recurring revenue. In 2018, Apple’s market capitalization surpassed $1 trillion, rising to an unprecedented $2 trillion in 2020. Although Apple’s market cap has decreased along with that of many other NASDAQ companies in the early 2022 period, it once again made history on January 3, 2022, when it briefly crossed the $3 trillion mark. Apple is still the largest publicly traded company, and the business is still expanding.

2. Berkshire Hathaway
Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B) is a central part in the protection business, offering different lines of business and individual protection through auxiliaries GEICO and Gen Re. In any case, Berkshire likewise possesses a different arrangement of organizations, for example, café network Dairy Sovereign, railroad goliath BNSF, and its Berkshire Hathaway Energy service organization. The company has a reputation for consistency in performance in addition to a wide range of businesses.

It is essential to keep in mind that Berkshire Hathaway is the only blue-chip stock on this list that does not pay dividends. CEO Warren Buffett prefers to invest the company’s cash rather than distribute dividends, despite having one of the most impressive track records of market-beating returns in history. That methodology has turned out perfect for investors up to this point.

3. Coca-Cola Coca-Cola, Inc. As the soft drink that bears its name became a global empire, KO) has been a market leader in the beverage industry for more than a century. However, Coca-Cola has also evolved with the times and now offers a much wider range of products, such as juices, sports drinks, and bottled water, aimed at customers who are more concerned about their health.

In particular, Coca-Cola stands out for raising its dividend. Since the early 1960s, it has increased its dividend payments annually in a row, placing it among the top 10 dividend stocks on the market.

4. NYSE: Johnson & Johnson Johnson & Johnson JNJ) is well-known for its well-known consumer goods, such as Band-Aids, Tylenol, and baby shampoo. However, J&J is a true healthcare giant that manufactures a wide range of medical devices that aid physicians and other medical professionals in carrying out procedures that can save lives. In addition, Johnson & Johnson manufactures medications like Remicade, which treats arthritis, Zytiga, which treats prostate cancer, and Stelara, which treats psoriasis.

This is something to keep an eye on as J&J prepares to split into two businesses by November 2023. One company will concentrate on consumer health products, which are thought to be J&J’s weakest line of business. The other company’s highly regarded pharmaceuticals and medical device division will be in the other.

5. American Express is a major financial institution (NYSE: Another reliable blue chip stock to think about is AXP). It operates both as a payments network and a credit card company. Its fundamental income generators incorporate Visa expenses and exchange handling charges. With more customers and more transactions, the business is on track to see an increase in both revenue streams. Despite being more than 170 years old, it appears to be still relevant: An encouraging sign is that millennial and Gen Z consumers will account for more than half of new card accounts in 2021.

The management of American Express is hopeful that the company will be able to grow profits by double digits in the years to come. The company also intends to distribute roughly a quarter of its profits as dividends to shareholders. As of June 202, it has already increased its dividend by 20% in 2022. In future years, additional increases should result from ongoing earnings growth.

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Bigger list of blue chip stocks Investors have a lot of options for blue chip stocks. Here is a rundown of 20 other top blue chip stocks:

AbbVie, Inc. Nike (NYSE: ABBV) Lockheed Martin (NYSE: NIKE) NASDAQ: Honeywell International Procter & Gamble (NYSE: HON) (NYSE: PG) Mastercard MA) JPMorgan Chase Walmart (NYSE: JPM) Microsoft (NASDAQ: WMT) Caterpillar (NYSE: MSFT) (NYSE: CAT) UnitedHealth Group Starbucks (NASDAQ: UNH) Oracle (NYSE: SBUX) ORCL)
Northrop Grumman (NYSE: McDonald’s (NYSE: NOC) Home Depot (NYSE: MCD) HD) Kroger, Inc. Merck (NYSE: KR) Intel (NASDAQ: MRK) Goldman Sachs (NYSE: INTC) GS)