What are Blue-Chip Stocks? Investing in Blue Chips

Blue-chip stocks are high quality stocks of giant companies that can boast an immaculate reputation they have been earning for years. The main distinctive features of such business entities are financial stability, a well-designed infrastructure, steady earnings reports, and a solid history of sustained growth. Just as blue chips in poker hold the highest value, so do blue-chip stocks in the stock market. They represent the crème de la crème of equities — the biggest, richest companies.

The company has grown fast in some years but it has greatly decelerated in the last two years. It incurred losses last year and is poised to incur further losses this year. Telephone & Data Systems is a telecommunications company that provides customers with cellular and landline services, wireless products, cable, broadband, and voice services across the U.S.

Best Performing Blue Chip Stocks Over The Last 12 Months

Branded pharmaceutical and specialty pharmaceuticals benefited from new customers. Revenue for the Medical segment decreased by 7% to $3.8 billion, while segment profit was down 66%. Inflationary pressures and lower volumes in products and distribution were the primary reasons for the declines. The Pharmaceutical segment makes up the lion’s share of revenues, but the Medical segment remains important due to its higher margins and growth potential.

• In addition, many asset managers also run mutual funds or index funds that specifically target blue chip securities, making it easy to invest in a basket of such companies.
• Learn more about how Morningstar values stocks in Morningstar’s Guide to Stock Investing.
• Blue-chip companies may face competition from smaller, more agile competitors or disruptive technologies that could potentially erode their market share and impact their growth prospects.
• Despite the uncertainty, some leading blue chips with competitive advantages are trading for pretty attractive valuations given the decline in the market over the past few years.
• In other words, they are large and extremely creditworthy businesses.

Investors often hold blue-chip stocks at the core of their portfolios. Blue-chip stocks are from companies that are large, well-established, and financially sound. These companies are leaders in their industries with strong brand names and reputations, and they generate dependable earnings. Blue-chip stocks usually boast consistent dividends and are often considered to be less risky, given the financial stability of these companies. This is another advantage of holding large-cap shares, which ties into the fact that blue-chips are often a safe bet when it comes to meeting investor expectations. Indices like the FTSE 100 and S&P 500 contain a mix of blue-chip stocks and large- or mid-cap companies that aren’t considered blue chip.

Evaluating Blue-Chip Stocks for Investment

The company’s revenue grew 13.2% for the quarter to $51.47 billion, which was $1.44 billion more than expected. On an adjusted basis, the company’s posted earnings of $467 million were flat year-over-year. Still, adjusted earnings-per-share of $1.32 was up slightly from $1.27 in the prior year because of a lower share count and interest expense.

The company provides property, casualty, specialty reinsurance through RenaissanceRe and joint ventures, including DaVinci, Top Layer Re, Starbound, Glencoe Group, and Starbound II. Approximately half of its premiums earned are attributable to property policies, with the remainder allocated to casualty and specialty. The $8.81 billion market cap company has increased its dividend for 27 consecutive years. On February 2nd, 2023, Merck reported the fourth quarter and full-year results for the period ending December 31st, 2022. For the quarter, revenue grew 2.1% to $13.8 billion, beating estimates by $140 million.

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For instance, Facebook (now Meta), had 1.84 billion daily active users by 2020, making it one of the best-known companies on the planet. Facebook also reached a market capitalization of over $1.05 trillion by July 28, 2021, which means it is well-capitalized. However, Facebook didn’t even exist until 2004, so it is not well-established enough to be a blue chip company. Since it was not well-established, Facebook was more likely to be displaced by competitors, broken up by regulators, or fall victim to some other unanticipated disaster. Blue-chip stocks can be an essential component of a long-term investment strategy due to their stability and income generation capabilities. By incorporating blue-chip stocks into their portfolios, investors can achieve diversification, reduce risk, and enhance long-term returns.

Pfizer stock offers the highest trailing yield among our list of the best blue-chip stocks to buy for the long term. We don’t think the market fully appreciates the pharmaceutical giant’s ability to offset major patent losses over the next five years, argues Morningstar director Damien Conover. We’re most bullish on several near-term launches, including the respiratory syncytial virus vaccine and immunology sitedudes reviews drugs ritlecitinib and etrasimod, says Conover. He also notes that solid midstage danuglipron data in diabetes and weight loss is promising, and that Pfizer could potentially launch competitive drugs into this class that could be disruptive. We think Pfizer stock is worth $48 per share; the stock currently trades 20% below that. There’s no set definition of what officially qualifies as a ‘blue-chip’ stock.

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On April 18th, 2023, Fulton Financial Corporation released first quarter 2023 results for the period ending March 31st, 2023. For the quarter, the company reported net income available to common shareholders of $65.8 million, or $0.39 per diluted share, a decrease of $13.5 million, or 17.1%, in comparison to the fourth quarter of 2022. Diluted earnings-per share equaled $0.95 compared to $0.70 in the year ago period, a 35.7% increase.

• But if you happen to make enough money to afford an expensive blue-chip stock, it will likely offer a stable source of extra income, at least in the form of dividends.
• Some investors may consider this company to be a play on the steel markets since ~72% of revenues come from steel.
• A dividend reinvestment plan (also known as DRIP), works just like it sounds.
• That and the fact that they have weathered multiple downturns in the economy make them stable companies to have in a portfolio.
• The term “blue chip” was first used in 1923 by Oliver Gingold, an employee of Dow Jones, to describe stocks that traded at $200 or more per share.

A blue-chip index tracks the performance of blue chip companies – corporations that are renowned for their reliability and quality. Blue-chip companies are popular with investors and so blue-chip indices are typically found on large and significant stock indices. In mid-February, Ryder reported (2/15/23) financial results for the fourth quarter of fiscal 2022. Thanks to growth in all business segments, it grew its operating revenue by 14% over the prior year’s quarter. Because blue-chip companies often have a firm footing in the economy with large revenues and total shares worth billions of dollars.

PERAMALAN VOLATILITAS DAN ESTIMASI VALUE AT RISK (VaR) SAHAM BLUE CHIP PADA SEKTOR PERBANKAN

Over time, the companies that are considered blue chip tend to change, so the exact definition of what is required for blue-chip status can be vague. However, a company that is considered blue chip will tend to be at or near the very top of its sector, feature on a recognised index, and have a well-known brand. Diversification is an essential investing technique that is applied to spread your money among various classes of stocks. Choose companies from contrasting industries and different geographical locations, and make sure your portfolio includes stocks with all types of market capitalization (small, mid cap companies, and large ones). Therefore, we s that investing in blue chip stocks could be a smart move for anyone looking for reliable dividend stocks that offer a high level of safety.