Blue Chip Stocks

A blue chip stock is a well-managed company with a long record of making money and creating shareholder value through a long-term rising stock price and increasing dividend payments. Usually blue chip stocks are large well-known companies such as:

General Electric (GE)
International Business Machines (IBM)
Proctor & Gamble (PG)
Johnson & Johnson (JNJ)
Phizer (PFE)

Blue chip stocks are held by many mutual funds, retirement funds, and individual investors.

Although the stock price of a blue chip stock routinely fluctuates for brief periods and may even be down for longer periods, the company's business is sound and there is little chance it's stock price will collapse completely. Blue stocks stocks afford the passive investor a vehicle for growth, income and safety. You don't have to worry that you'll read in the newspaper that a blue chip stock is suddenly going out of business.

Most blue chip stocks pay dividends, which give shareholders real cash or the opportunity to buy more shares with dividend reinvestment. Some blue chip stocks raise their dividends annually making them core holdings for dividend reinvestment portfolios.

Of course there are many fine companies that are not considered to be blue chip. And many of them are safe and profitable stocks to own. But the large blue chip names have proven to be winners over the long term for the buy-and-hold investor.

For more stock choices read Sample Portfolios.