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In sports, a blue-chip prospect is thought to be a can’t-miss talent — someone who will excel at the game no matter what obstacles are thrown. Blue chips are safe bets with high floors and potentially limitless ceilings. Blue chip stocks are the same way. When investors buy blue chip stocks, they want proven track records and promises of future success. And while investing in stocks is never a completely safe bet, blue chips are often stocks with the best risk/reward trade-off. If you want to add blue chip stocks to your portfolio, here are 10 very successful stocks with staying power.
Blue chip is a nickname given to stocks of a well-established and trusted company. These are companies that investors rely on due to their credibility and reliability. Think industry leaders and household names. These large-cap stocks often have a market valuation of $10 billion or more.
While blue chip companies are reliable, that also comes with slower growth. This makes them a conservative option for investors looking for a safe bet for their already established portfolio.
Blue chip stocks can be identified by the following shared traits:
- Growth history: Blue chips always have a solid history of sustained growth. This also means good future prospects. They’re already established.
- Component of a market index: You’ll find these stocks in major market indexes, like the S&P 500 or the Nasdaq 100.
- Higher dividend payouts: Dividends are regular payments made to investors from a company’s revenue. While there’s no requirement that a blue chip stock pays a dividend, it’s a common trait. Think Verizon’s 5% dividend. Small-cap stocks focus on expansion rather than dividends.
Compare Online Brokers
Webull, founded in 2017, is a mobile app-based brokerage that features commission-free stock and exchange-traded fund (ETF) trading. It’s regulated by the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA).
Webull offers active traders technical indicators, economic calendars, ratings from research agencies, margin trading and short-selling. Webull’s trading platform is designed for intermediate and experienced traders, although beginning traders can also benefit.
Webull is widely considered one of the best Robinhood alternatives.
- Active traders
- Intermediate traders
- Advanced traders
- No account maintenance fees or software platform fees
- No charges to open and maintain an account
- Intuitive trading platform with technical and fundamental analysis tools
- Does not support trading in mutual funds, bonds or OTC stocks
SoFi’s mission is simple: to help reach clients like you reach their financial independence and realize their ambitions. SoFi knows that this independence comes from making decisions that help your money start to work for you in the long run. The brand helps individuals make these decisions through personal financial products such as personal loans, student loans and automated and active investing.
The brand additionally provides in-person experiences such as educational and networking events, personalized guidance from experienced financial planners and one-on-one advising with professional career coaches. SoFi’s services have been highlighted in outlets such as Forbes, Medium, and CNBC’s Make It.
- IPO Investing
- Mobile Investing
- U.S.-based customer service
- Highly-rated mobile app for iPhone and Android
- Only available in the U.S.
Moomoo is a commission-free mobile trading app available on Apple, Google and Windows devices. A subsidiary of Futu Holdings Ltd., it’s backed by venture capital affiliates of Matrix, Sequoia, and Tencent (NASDAQ: FUTU). Securities offered by Futu Inc., regulated by the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA).
Moomoo is another great alternative for Robinhood. This is an outstanding trading platform if you want to dive deep into smart trading. It offers impressive trading tools and opportunities for both new and advanced traders, including advanced charting, pre and post-market trading, international trading, research and analysis tools, and most popular of all, free Level 2 quotes.
Get started right away by downloading Moomoo to your phone, tablet or another mobile device.
- Cost-conscious traders
- Active and Advanced traders
- Over 8,000 different stocks that can be sold short
- Access trading and quotes in pre-market (4 a.m. to 9:30 a.m. ET) and post-market hours (4 p.m. to 8 p.m. ET)
- No minimum deposit to open an account.
- No chat support
This latest groundbreaking technology is IBKR GlobalAnalyst, a new trading tool that helps investors compare the rate of PEG or price-earnings growth valuations and provide more immediate and comprehensive financial metrics of stocks, globally.
Recognizing that stock selection can be challenging for investors to compare the valuations of domestic and international stocks, Interactive Brokers created GlobalAnalyst to offer investors a simple, yet powerful tool to easily evaluate investment opportunities around the world.
Using GlobalAnalyst, investors can search for stocks by region, country, industry, market capitalization and currency to uncover undervalued stocks worldwide. The resulting table displays the current market and financial metrics, including the PEG Ratio. The PEG Ratio is the PE ratio divided by the three-year compound earnings growth rate, and smaller PEG Ratios typically indicate undervalued companies.
- Price earnings growth valuations
- Easily evaluate investment opportunities
eToro is a broker that offers access to over 25 of the world’s most popular cryptocurrencies, forex and over 1600 stocks. They have a few unique education and useability tools. Traders can begin buying and selling in as little as 10 minutes.
eToro’s unique CopyTrader feature allows new investors to “copy” the buy and sell orders of professional investors, while the company’s eToro Club feature provides investors with a range of additional education tools and resources.
- Traders looking for an easy-to-use platform
- Traders who want to practice their trades using a virtual account before entering the market
- Simple platform that is easy to master
- CopyTrader feature that allows new traders to copy the same strategies used by professionals
- Virtual dummy account that gives you $100,000 to practice trades
- High non-trading fees
E*TRADE is an online discount trading house that offers brokerage and banking services to individuals and businesses. One of the first brokers to embrace online trading, E*TRADE not only survived both the dot-com bubble and Recession — it thrived. You can choose from two different platforms (one basic, one advanced). E*TRADE is a suitable broker for traders of most skill levels, whether you want to buy mutual funds and hold them for decades or dabble in options swing trading. E*TRADE offers a library of research and education materials to help you out.
- Active traders
- Derivatives traders
- Retirement savers
- Sophisticated trading platforms
- Wide range of tradable assets
- Exceptional customer service
- Limited currency trading
- Higher margin rates than competitors
- No paper trading on its standard platform
Should You Invest in Blue Chip Stocks?
Nike. Coca-Cola. Starbucks. Walmart. These are names you know quite well. But should you invest in them? One thing these big names have in common is cost efficiency, which leads to a strong earnings growth and distribution.
Stable and reliable, having a blue chip stock in your portfolio is never a bad thing. This stability points to strong financial footing, meaning no debt and a lot of efficiency. Blue chip stocks are often protected from severe volatility, making the risks quite limited. Although investing in a blue chip stock brings steady, long-term returns — they are well regulated and have potential for regular dividends — there are some cautions to keep in mind.
Lag: Blue chip stocks can lag the market index, meaning they suffer from poor management practices and even scandals. They can also lose market share to smaller companies.
Won’t beat the market: Because blue chip stocks are stable, they are not going to have skyrocketing prices or super-quick growth like smaller companies and start-ups. They aren’t likely to stray from the averages when it comes to returns.
Tricky for young investors: A lot of blue chip stocks pay dividends, rather than investing in their own growth and increased stock value. For investors just starting out, you may want to find a stock that helps you build wealth, rather than a steady stock that won’t see much action.
The (Steady) Rise of Blue Chip Stocks
Blue chip stocks are the companies you trust. The ones in your home. The drinks and food on your shelf, the hair products in your bathroom, the credit card in your wallet, the shows you watch. Blue chip stocks are reliable, which is why they’re so appealing to investors.
While blue chip stocks are slow to grow, they’re still a trusted addition to any portfolio. That’s because these companies are predicted to have a bright future, whether through new products or inventions. Think Apple’s VR headset and Watch or Nike’s collaborations and new shoe technology. If you’re looking for dividend payouts and steady growth, blue chip stocks are perfect for your portfolio.
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