Blue-Chip Stock
Shares of a large, well-established, financially sound company with a long record of reliable performance and often dividend payments.
What is Blue-Chip Stock?
A blue-chip stock refers to shares of a nationally recognized, well-established, and financially stable company that has operated for many years and has a reliable track record of strong performance. The term originates from poker, where blue chips have the highest value. Blue-chip companies typically have large market capitalizations, dominant market positions, consistent earnings, long dividend histories, and investment-grade credit ratings. Examples include Apple, Johnson & Johnson, Coca-Cola, JPMorgan Chase, and Procter & Gamble. While not immune to downturns, blue chips are generally considered more resilient than smaller companies and are often core holdings in conservative portfolios and index funds.
Example
Johnson & Johnson has paid and increased its dividend for over 60 consecutive years, qualifying it as a Dividend King. Its inclusion in the Dow Jones Industrial Average and S&P 500, combined with its diversified healthcare portfolio, make it a classic blue-chip holding in retirement and income-focused portfolios.
Source: Investopedia — Blue-Chip Stocks