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