How to Define Blue Chip Stock

Microsoft. Coca Cola. Walmart. You probably recognize these names. They have been around for a long time. These are a few of the companies that are known as "blue chip" stocks. But what is a blue chip stock?

Difficulty: Moderately Challenging

Instructions

1. Look at longevity. A blue chip stock is well established and has been around for a long time. It's not a trend or a fad stock. Coca Cola is a good example of a blue chip stock. It has been around since 1886.

2. Seek out stability. A company categorized as blue chip would be one the consumer has an ongoing need for. Walmart is a company that carries bandages, clothing, food-- all items consumers will need no matter the health of the economy.

3. Read up on your stocks. Blue chip stocks are members of Standard & Poor's (S&P). Standard & Poor's is a section of McGraw Hill. Their job is to research and study stocks and bonds to determine their stability, size, and potential for longevity.

4. Know that blue chip stocks pay regular dividends to its investors. Dividends are profits shared among investors.

Resources

• Blue Chip
• Blue Chip Stocks
• Standard & Poor's
• Dividend
• Blue Chip