Blue Chip Stocks are the large, industry leading companies that are well-established, financially sound and have operated for many years. These blue chip companies have a stable or rising record of dividend payments and have a reputation of sound fiscal management.
A blue-chip stock typically has a market capitalization in the billions, is generally the market leader or among the top three companies in its sector, and is more often than not a household name.
It’s alleged that blue chip stocks got their name from highest value chips used in the game of poker.
Even though blue chip stocks generally have a stable record, they have been known to fail in the past under severe market stresses.