What are blue chip stocks? | How to invest in 2024| finder.com (2024)

What are blue chip stocks?

Blue chip stocks are huge, well-established companies with popular brands and products like Apple, Amazon and Coca-Cola. These companies are financially sound, often have a market capitalization of billions of dollars or even trillions and have been around for decades. Some blue chip companies distribute dividends, another reason investors flock to their stocks.

How to invest in blue chip stocks in 5 easy steps

1. Choose an online stock trading platform. Choose from our top picks or jump straight to the best stock trading apps of 2024.
2. Sign up for an account. Provide your personal information and sign up.
3. Set up a funding method to pay for the transaction. Deposit funds into your account by linking your banking information.
4. Choose the stocks you want to buy. Search for the stock by name or ticker symbol.
5. Place your order. Buy the stock. It’s that simple.

Our top picks for blue chip stock trading platforms

Blue chip stocks list

The Dow Jones Industrial Average, which lists 30 prominent companies, is a good place to start. These companies are often regarded as some of the country’s most valuable and reliable heavyweights. However, many others listed on the New York Stock Exchange or the NASDAQ also qualify as blue chips. Below is a list of over 40 blue chip stock companies broken down by industry.

Technology companies

The FAANG stocks — which are made up of Meta (formerly Facebook), Amazon, Apple, Netflix and Alphabet (Google) — is one of the most popular groups of blue chip stocks that dominated the tech sector in the past 15 years. Other tech blue chip companies include:

Banking and financial services

Companies in the financial sector make up a portion of the blue chip classification. These companies tend to have a history of providing large dividends and include the major banks and credit card companies, including:

Manufacturing

The products and brands that many Americans across generations have grown up knowing sustained growth and success, including:

Oil, gas and mining

As drilling and mining is a cyclical industry, natural resource companies have the potential to provide high capital growth. But these can have a reputation for underperforming when the mining industry experiences a downturn. That said, companies that have diversified businesses firmly established across the nation include:

• BP (BP)
• Chevron (CVX)
• Exxon Mobil (XOM)

Retail and restaurants

Retailers tend to offer medium-sized dividends to shareholders and are popular choices among investors. Also, popular restaurant chains have loyal followings that provide consistent profits. Blue chip stocks in this sector include:

• Costco (COST)
• eBay (EBAY)
• Home Depot (HD)
• Nike (NKE)
• Walmart (WMT)

Blue chip exchange-traded funds (ETFs)

An ETF is a fund that holds a basket of stocks. In this case, a basket of blue chip companies. The cool thing about ETFs is that they trade like stocks and you can buy them from any brokerage or a trading platform. This provides instant diversification to your portfolio without much effort.
Here are some popular blue chip ETFs:

• SPDR Dow Jones Industrial Average ETF Trust (DIA). An ETF that tracks the 30 blue chip companies in the Dow Jones
• . An ETF that tracks the S&P 500 index, which includes stocks from the 500 largest publicly-traded companies in the country.
• Invesco QQQ Trust Series 1 (QQQ). An ETF that tracks the NASDAQ 100, a tech-leaning index holding stocks from 100 of the biggest NASDAQ-listed companies.
• ProShares S&P 500 Dividend Aristocrats ETF (NOBL). An ETF of 50 companies that have increased their dividends every year for more than 25 years

Why are blue chip stocks popular among investors?

Many successful long-term investors like Warren Buffett have advocated for investing in companies you believe will be around for a generation or two. The kind of stocks that tend to fit that description are the blue chips that continue to show steady returns. This may translate to consistently higher stock prices and consistent dividend payouts.

It’s a versatile combination that allows you to either reinvest those dividends and compound the earnings over time or take the dividends as a stream of passive income. On top of that, holding investments for the long term also has some significant tax advantages.

As for intangible benefits, investing in a company you can rely on for the long haul takes away much of the anxiety or worry an investor feels about a volatile stock market.

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Frequently asked questions about blue chip stocks

• Blue chip stocks are stocks that represent the largest and most well-established companies with recognizable brands. Companies with a market cap of over $200 billion are typically considered blue chip stocks companies. Blue chip companies often distribute dividends to investors.

• This largely depends on your financial goal and how long you plan to hold the company. For example, if you're looking for a steady return, then value companies that offer dividend payments could be worth considering. If you're looking for a higher upside potential without dividends, then growth stocks are the ones to consider.

  Check out our guide on the best blue chip stocks to buy now.

• Yes! Blue chip stocks are reliable stocks from huge, well-established companies with popular brands and products like Apple, Amazon and Coca-Cola. These companies often have a market capitalization of billions of dollars or even trillions, are financially sound and have been around for decades. Some blue chip companies distribute dividends, another reason investors flock to their stocks.

Bottom line

• Blue chip stocks represent the largest and most well-established companies with recognizable brands.
• Companies with a market cap of over $200 billion are typically considered blue chip stocks companies.
• Blue chip companies often distribute dividends to investors.

Buy blue chip stocks now