Blue chip stock is a high quality and high value stock. It receives status from its previous record of being a high growth, high dividend payment company. Blue chip shares are very large and well-recognized companies with long history of sound financial performance. These stocks have the capabilities to bear difficult market conditions and to give higher returns in good market conditions.
Blue chip stock usually holds high costs because they have good market reputation. A blue chip company is financially very strong, with earnings production and solid track record of only moderate amounts of debt. It has strong name in its industry with major products or services. Blue chip companies have many features: They are usually big companies. They are usually old companies.
Performs relatively well during the economic downturn. They have long-term, stable development records. They generally pay regular dividends, and the dividends generally increase over time. They have reputation as management and industry leaders. They are usually very credit worthy.