The Term Blue Chip comes from an American game poker, In 1920s , Blue Chip (coin) was used in the poker game. These blue coins are considered to be the most valuable.
Blue chip company/stock name is used in the stock market for companies whose market cap is much higher than the other company and this company is the largest company of its sectors which also has a good record. They are the most trusted and most invested companies in the market. Blue-chip companies are financially strong and they are not affected much by market fluctuations.
Benefits of investing in Blue Chip Stocks
Large Market Cap / Less Risk : The market capitalization of Blue Chip Companies is very large and these companies are leaders in their business and industry.so investing in it is considered less risky than other companies.
Good Dividend: Blue chip companies are considered as Capable companies making regular profits. Therefore, these companies also distribute some part of their profits to investors in the form of dividends.
Benefit of Bonus Shares: These companies also issue Bonus time to time. Due to which the investors also get the benefit of additional shares in the form of bonus shares.
Liquid Shares: These stocks are more liquid than Mid-Cap or Small Cap stocks, because of the high liquidity in these stocks, they are very easy to trade or buy and sell.
Profitable For a Long Term: Blue Chips Shares prove to be beneficial in the long run, meaning that a long-term investment in these stocks can produce beneficial results.
Features of Blue Chip Shares -
- Blue Chip companies are big reputed companies.
- These companies have a strong balance sheet and a healthy income statement.
- Most of these companies have been listed on the stock market for a very long time.
- Their services / products are widely used by people.
- Blue Chip companies are surviving a variety of market crises, financial crises, etc. and yet they remain strong.
All major investors of the stock market Mutual Funds Houses and Foreign Investor are mostly invested in the shares of Blue Chip Companies . A typical investor is always advised to invest in a Blue Chip Company. Blue-chip shares usually have higher Liquidity and lower Volatility, and there is always a good chance to get a dividend.