Have you heard of blue-chip stocks? They are a smart investment choice; but why? The answer to why is hidden in its definition that says stocks of well-established, financially sound companies operating their business successfully for many years are blue-chip stocks. These sound companies tend to produce steady profits. And slow-but-steady usually wins the race.
Blue chip stocks are an integral part of the most reputable market indexes, as the Standard & Poor’s (S&P) 500, the Nasdaq-100, and the Dow Jones Industrial Average. How big should a company be to be considered as a Blue Chip company? The debate is still on. A generally accepted benchmark is a market capitalization of $5 billion.
If you check the dividend payment history of most of these companies, you will find the one thing they all tend have in common is a good payment record. And it is probably a good idea to make this feature a prerequisite in identifying your own personal best blue chip stocks.
What other features should you look for? This question can only be answered completely and definitively by you. But two things are certain.
First, blind investment is always risky. Whether you are going to invest in a well-established company or a small, unproven one, it is important to know about the company and the risks associated with investing in it.
Second, stock research sites can be of great assistance in developing a list of features to look for and a sound plan for investing in blue chip stocks. They will give you the guidance and detail to make sound investment choices.