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What is a Blue-Chip Stock?

What is a Blue-Chip Stock?

A blue-chip stock generally refers to a publicly traded company that is very well-established and is in the top tier of market capitalization, usually in the tens of billions.

There is no formal definition for what makes a company a blue-chip stock, but the general category includes some of the biggest and most household names available to trade. Companies like Johnson & Johnson, Walmart, Visa, Dow Chemical, and so on, that have been around for decades and have market capitalizations in the tens of billions. (click on the link for each company to see their current stock price)

Blue-chip stocks tend to pay dividends and are sought by investors who want to buy the biggest and most experienced companies, that have been around for the longest. Blue-chip stocks do not necessarily perform better or worse than other categories of stocks, but tend to be less volatile than say a technology high growth name.

The term “blue chip” comes from poker, where the blue chip is generally the highest value.

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Keywords: market capitalization, stocks, large cap, implied volatility, blue chip,