What Is Blue Chip Stock?
Shares of a large, financially stable, well-established company with a long track record.
The Full Definition
Blue chip stocks are shares of large, financially stable companies with decades of consistent earnings, dominant market positions, and often long dividend histories. The term comes from poker, where blue chips hold the highest value. Blue chips like Apple, Johnson & Johnson, and Procter & Gamble are considered lower-risk equity investments. They typically underperform smaller growth companies in bull markets but hold up better in downturns.
Real-World Example
Johnson & Johnson has paid and grown its dividend for over 60 consecutive years. That kind of durability — through recessions, market crashes, and competitive shifts — is the defining characteristic of a blue chip.