What Are Blue Chip Stocks? 17 Stocks To Consider

If you follow the stock market — even as a casual observer — chances are that you’ve heard the term “blue chip stock.” These stocks, known for their reliable returns, are often used as a benchmark to track the stock market. Keep reading to learn more about blue chip stocks and whether they’re a good choice for you.

Key Takeaways

  • Blue chip stocks represent mature, defensive companies with consistent cash flows and less volatility than the overall market.
  • These stocks can come from a range of industries.
  • Investors like blue chip stocks because they tend to be reliable and stable.

What Are Blue Chip Stocks?

A blue chip stock is the stock of a company that is considered to be a reliable performer, with a history of consistent growth. That’s not to say a blue chip stock will earn money every year, or that it will never decline in value. In general, though, blue chip stocks rise in value over time — and often outperform other companies in their industry, which may give you peace of mind if you’re concerned about whether blue chip stocks are safe. Because they perform well, however, blue chip stocks tend to cost more than other types of stocks.

Price isn’t the only feature that makes blue chip stocks different from the rest. They tend to pay smaller dividends than income stocks and greater dividends than growth stocks. Their prices also tend to be higher than growth stocks because they are considered less risky, but they don’t have the same potential for growth.

Which Companies Are Blue Chip Stocks?

Blue chip companies cover a diverse range of industries, from manufacturing to entertainment, and include some of the most well-known name brands in business today. Here’s a list of 17 popular blue chip stocks.

Stock YTD Return (2023) 1-Year Return
Apple (AAPL) 16.87% -4.71%
Microsoft (MSFT) 6.18% -8.70%
Procter & Gamble (PG) -9.19% -9.93%
Johnson & Johnson (JNJ) -12.78% -10.49%
Walmart (WMT) -1.97% -1.92%
ExxonMobil (XOM) 1.06% 28.03%
JP Morgan Chase (JPM) 3.15% 6.97%
Berkshire Hathaway (BRK.A) 0.68% -2.61%
3M (MMM) -10.57% -25.08%
Coca-Cola (KO) -5.88% -1.90%
American Express (AXP) 18.71% 10.32%
Visa (V) 7.62% 17.34%
Disney (DIS) 14.38% -25.45%
Pfizer (PFE) -21.24% -15.95%
McDonald’s (MCD) 1.51% 19.27%
Google (Alphabet) (GOOG) 6.12% -25.41%
AT&T (T) 1.47% 5.00%
Investing for Everyone

Why Invest In Blue Chip Stocks?

Some investors prefer to invest in blue chip stocks because of their history in being both reliable and stable. Although they may cost more to buy and pay smaller dividends than other stocks, they tend to be less susceptible to volatility in the market. Like other stock investments, blue chip stocks are not guaranteed, but they have a better chance of surviving and recovering from a crisis than less established stocks.

What Are Blue Chip Funds?

Blue chip funds are a type of stock fund that invests primarily in blue chip stocks. Because they’re invested in blue chip stocks, they have similar advantages, like lower volatility, than other stock funds. They also don’t have the same potential for growth as funds that invest in companies within a specific market index.

Investing in stock funds offers several advantages over investing in individual stocks, including diversification, capital appreciation and liquidity. At the same time, stock funds increase and decrease in value depending on the performance of the stocks in the fund. It is possible to lose money on the investment. Dividends earned on stock funds are subject to taxes.

How Do You Buy Blue Chip Stocks?

Like any other stock, you can purchase blue chip stocks through a broker. As with any investment, you should understand what you are buying. Blue chips make for a good place to start since these companies have products that are so well-known.

Since they are generally large companies, blue chip stocks tend to be stable, so most people purchase them intending to hold them for a long period of time. Because they typically appreciate over time, investors are rarely disappointed with this strategy.

Investing for Everyone

Blue chip stocks are a good place to start if you want to invest in a recognizable company that has a good chance of performing well. As with any other investment, you should understand what you are buying, diversify your holdings and be aware of fees.

Final Take

Blue chip stocks are among the most defensive and reliable stocks you can buy. They have earned the blue chip moniker from years of sound business practices and consistent generation of cash flow. While blue chips are well-run companies that dominate their fields, they can still have rough patches where their stock prices fall. But as long as you keep this risk in mind, you can generally rely on the fact that blue chip companies will outrun, outlast and outmaneuver their competitors over the long run.

FAQ

Here are the answers to some of the most frequently asked questions regarding blue chip stocks.
  • Which blue chip stock is best?
    • The best blue chip stock for you would depend on your investment goals, style and risk tolerance but some of the most popular blue chip stocks to consider would be Pfizer (PFE), Coca-Cola (KO) and Walmart (WMT).
  • Is Google a blue chip stock?
    • Yes, Google is considered a blue chip stock.

John Csiszar contributed to the reporting for this article.

Data is accurate as of March 7, 2023, and is subject to change.

Our in-house research team and on-site financial experts work together to create content that’s accurate, impartial, and up to date. We fact-check every single statistic, quote and fact using trusted primary resources to make sure the information we provide is correct. You can learn more about GOBankingRates’ processes and standards in our editorial policy.

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