Every company is different. All because of its life, business model, earning capacity, and much more. Some companies are essential. The reasons may be various. Investors Called them Bluechip.
The name “blue chip” came from the game of poker. In the game, the blue chips have the highest value. Widely recognized, well-established, and financially sound companies are also known as blue-chip companies. Their products are also well-known high-quality products and services. All of these companies safeguard your investments because of their vast revenue, good profitability, good utilization of resources, and possibly high % of return on equity which is a reason for the dividend also.
The list is different all over the world. Say Microsoft is Bluechip in the US market. Coal India, HDFC is Bluechip in India, and so on. Whatever the names, the criteria are the same worldwide, and many analysts accept it. Blue-chip stocks are seen as a less volatile investment than owning shares in companies without blue-chip status because blue chips have an institutional quality in the economy. A blue-chip company is well-known, well-established, and well-secured in the investment world.
It is considered a leading company in its sector and produces dominant goods or services. Generally, a blue-chip company is impervious to economic downturns, contributing to its quality of generating consistent revenues and stable growth. Therefore, it is usually considered a household name. Another similarity is that most Blue Chips survived many adversities. From Apple to Microsoft, Coal India, Maruti Suzuki, ONGC, Johnson & Johnson, TESCO, SIEMENS, and so on. their business model is different from their peers. It is one more reason. Let’s say Microsoft if this company was not there. Today’s era possibly is different. Let’s say IBM. Apple is king worldwide, but the king of kings is IBM because they still exist. One another characteristic. Sometimes these companies are MNCs and have many subsidiaries. Say VODAFONE, AUDI, ONGC, P&G, and so on.
An interesting fact is that the US has its Index, which mostly follows BLUE CHIP STOCKS. It is DOW Jones Industrial Average. India doesn’t have anything like it. But there are some extensive stocks listed on the exchange which many analysts track. They are HDFC and HDFC Bank, ICICI, SBI, ONGC, HUL, COAL INDIA, L&T, Maruti Suzuki, Tata Motors, and Tata Steel. One significant indicator is most Bluechip is known for its dividend history. So if you don’t know anything and if you start finding large-cap stocks that pay steady dividends, then most of your list is contained with blue-chip—going to end this post with a statement that Blue chips are the stocks that teach you the importance of long-term investments. Of course, they never give a return in one day, but they are one of the best investment opportunities.
