You know investing in stocks is a good thing, and you want to throw in, but with the market constantly in flux, you find yourself getting spooked. Later, you see that you missed out on some really lucrative investment opportunities because you were too nervous to take the plunge.
Sound familiar? You’re in good company. This happened to me, and not just once – on several occasions.
There is, however, a kind of investment that can negate the stress of a fluctuating market — Blue-Chip Stocks.
What Are Blue-Chip Stocks?
Blue-Chip Stocks are companies that have stood the test of time and survived many years of financial and political hardship. They can be classified as leaders of their industries, and they’re known to pay dividends. Like precious metals, they can be future-proof, trustworthy, and reliable sources of income to the clever investor.
A company cannot be classified as a Blue-Chip Stock overnight, they have to earn that title, and they do it through hard work, innovation, and perseverance. Buying their stock can be a great way of building and, more importantly, holding wealth. They’re THAT reliable.
Types of Blue-Chip Stocks
There are many examples of Blue-Chip Stocks out there that you are probably aware of but have never thought or heard of in this light.
Companies such as:
- Johnson & Johnson (JNJ) – established in 1886, the pharmaceutical and medical device company survived both world wars AND the great depression. It’s currently worth $162.73 per share.
- Mastercard (MA) –establish in 1966, this global financial titan is currently worth $368.66 per share.
- Facebook (FB) – established in 2004, Facebook is integrated into almost every aspect of the internet today and is currently worth $332.72 per share.
What do all these companies have in common? They dominate their respective markets, maintain a formidable financial presence, and are set to stay that way well into the future. But for all that, they’re not out of reach. With Blue-Chip Stock investments, you can get in on the success and strengthen your financial portfolio. Here’s how…
Tips to Invest in Blue-Chip Stocks
As with all investments, you need to do your homework. Blue-Chip Stocks don’t come labeled that way. Rather, you can find them by doing your research and noticing trends. Blue-Chip Stocks aren’t necessarily the most expensive stocks; they are those that have performed the best in their industry over time.
Start by researching the company’s age. If the company has been around long enough to have held its own against generations of change and adaptation, then you know they’re reliable.
Take company 3M as an example. Founded in 1902, they managed to grow and adapt with the decades. If you want really strong tape or Post-it notes that won’t lose their stick, you’re going to choose a 3M brand. Their reputation is reflected in their stocks. If you check their quarterly and annual reports, you’ll see that they’re strong, reliable, and always growing with time.
Of course, age is not the be-all and end-all. Newer companies can also reach this same level of long-lasting success, especially when it comes to modern technology. I mentioned Facebook earlier as a pillar of online communication. It’s hard to imagine a world where we weren’t turning to Facebook to keep up with old friends or to let the world know that our kids are graduating from college or that we just took a really great trip to the beach. Though young, Facebook’s financial performance to date indicates that it’s clearly a reliable investment.
These companies, and many more that fit into the category of Blue-Chip Stocks and can be found on any major Stock Exchange, such as the New York Stock Exchange (NYSE) or the London Stock Exchange (LSE). They can be bought, sold, and traded like any other stock, so their reliable nature makes them powerful earners in the short term. However, if you’re looking to really make a killing in Blue-Chip Stocks, they can be best used for their dividends.
Food for Thought
A Blue-Chip Stock will typically hold a market share in the BILLIONS, and their steady growth makes them eligible for quarterly dividend payouts.
A personal suggestion for a great Blue-Chip Stock would be the Walt Disney Company. With their diverse catalog of classics dating back to the 1930s, and their current wave of exciting new Marvel and Star Wars movies, shows, and video games, they continue to rake in profits and payout dividends year after year. Simple question – which would you prefer: A short-term sale profit or a quarterly payout of profit percentages? I know you don’t even need to think about it.
With the best Blue Chip Stock investments, you will find yourself the receiver of regular dividends from profits you can trust. Think back to the market crash of 2007/2008. Many companies suffered massive losses, and their investors took a bath. Yet, companies like PepsiCo. continued to stay strong. Why? Because they sold a product people never stopped wanting.
With all this in mind, Blue-Chip Stocks seem like a miracle in finance. But you know what they say about things being “too good to be true,” which is why I will offer one more suggestion – don’t put all your eggs in one basket. As with all things, it pays to be diverse and not rely solely on a single form of income.
Blue Chip Stocks are at their strongest when used as part of a larger portfolio. Continue with your usual trading wizardry, but include a few Blue-Chip Stocks like Disney, AT&T, or technology giant Apple to help maintain a steady income. Diversifying asset allocation helps you nail wealth management.