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.
List of the Biggest Blue Chip Stock Companies
Tech companies. Social media. Insurance. The 10 biggest blue chip stocks are all names you probably know very well. You use their products everyday, seek their services often and see their names throughout stores and websites. Let’s take a look at the 10 biggest blue chip stocks in the New York Stock Exchange.
|Name||Industry||Market Cap||10-Year Return|
|Social Media||$574 billion||423%|
|Berkshire Hathaway||Insurance||$523 billion||288%|
|Visa||Payments Technology||$395 billion||1,200%|
|Johnson & Johnson||Consumer||$372 billion||233%|
|JPMorgan Chase||Financial||$370 billion||348%|
Meet the 10 Biggest Blue Chip Stock Companies
This software giant was part of the PC revolution of the 1990s. Its operating system, Windows, was installed in almost every new computer that customers purchased throughout that time period, thanks to its many partnerships. While the early 2000s were a bit concerning for Microsoft, the giant changed the game once again with its cloud-based services, like Office, massively boosting its revenue.
Does anyone remember when Amazon was just an online bookseller? It’s now one of the biggest e-commerce and cloud computing companies in the world, offering almost every product you can think of. Amazon also purchased Whole Foods Market, introducing consumers to online food ordering. Then there’s the Kindle and Echo devices. Currently, Amazon is looking for ways to boost its international sales, which are still not too impressive.
PC’s biggest competitor, almost everyone knows Mac computers and iPhones. Apple has always been ahead of the game, introducing the iPod before cell phones had the capabilities they currently have. Recently Apple has paved the way with the Apple Watch and now Apple TV+. Still, investors wonder if Apple has anything to offer outside of the iPhone and Apple TV’s initial offerings.
Pixar. ESPN. Marvel. ABC. Disney rules entertainment. Almost everything you watch is produced, owned or partnered with Disney in some way, which is a little scary. But also impressive. As Disney continues to create an entertainment monopoly, it has also introduced Disney+, a streaming platform that saw immediate success thanks to nostalgia. Then there’s the parks and the merchandise. The Star Wars movies. It never ends.
Facebook is a relatively new stock, but has already seen massive success. Unlike MySpace and Tumblr, Facebook has been able to remain the top social media platform for over 10 years and shows no sign of slowing down. Facebook also owns Instagram, another social media site that has seen a steady increase in popularity. Facebook also has a messaging service, WhatsApp, and a virtual reality company, Oculus.
Berkshire Hathaway (BRK.A)
Berkshire Hathaway was made a household name thanks to investor Warren Buffett. It’s an insurance business that offers a wide variety of coverage. But what makes this company unique is that it uses collected premiums to invest in other companies until they have to make claim payments.
In the 1970s, BankAmericard changed its name to Visa, operating as a private corporation. In 2008, Visa announced its first public offerings. It does business across the globe, with billions of outstanding cards. It has its eyes on a future where all payments are electronic. Most banks offer Visa debit cards, which give Visa some of the profit. Competitors in the industry have forced Visa to stay innovative, keeping it ahead of the game.
Johnson & Johnson (JNJ)
Starting out with just baby shampoo, Johnson & Johnson is now a giant healthcare conglomerate: BAND-AID. Tylenol. Dental floss. Medical instruments. It has collaborated with the pharmaceutical segment, offering medication for Crohn’s disease, cancer-fighting drugs and blood thinners.
JPMorgan Chase (JPM)
JPMorgan Chase has been a big part of the U.S. economy since the nation was founded. In 2000, JPMorgan purchased Chase Manhattan Bank, using bank consolidation to become the largest U.S. institute. While JPMorgan Chase was affected by the financial crisis in 2009, the bank recovered slowly over time after taking financial assistance from the federal government. Not pretty. But now it’s stronger than ever before and is often seen as a very safe choice for investors.
ExxonMobil is one of the world’s largest publicly-traded international oil and gas companies. Once the Rockefeller Standard Oil empire, it is now involved in almost every segment of the energy industry, researching new oil resources and opening up gas stations left and right. Even though energy prices have become extremely volatile in recent years, ExxonMobil has the resources to not just survive, but thrive. Its growth has made it a safe bet for investors.
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.