Blue-Chip Stock
A blue-chip stock is a share of a large, well-established and financially stable company with a long record of reliable performance.
Blue chips are the household names of the stock market: large, mature companies that are leaders in their industries and have a long track record of operating through good and bad economic times. Many of them pay regular dividends, and some have raised their dividends for decades.
The term comes from poker, where blue chips traditionally have the highest value. There is no official list of blue-chip stocks, but members of the Dow Jones Industrial Average are often used as examples, and in Europe the Euro Stoxx 50 is described as a blue-chip index.
Blue-chip stocks are generally seen as more stable than smaller companies, with strong balance sheets and steady cash flow. That does not make them risk-free. Even well-known companies can lose market share, face disruption or see their stock fall significantly, and some former blue chips have gone bankrupt.
Investors often hold blue chips as a core part of a long-term portfolio because of their size, liquidity and, in many cases, dividends.
Example: a decades-old consumer goods company with global brands and a long dividend history would typically be called a blue chip.