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Financial Literacy

How to Buy Blue Chip Stocks

Learning how to buy blue chip stocks can be a huge boost to your investment portfolio. In fact, many of the top investors in the world rely on these stocks every day.

The stock market presents a wide range of opportunities for the taking. However, there may not be a safer, more reliable choice than blue chip stocks. Let’s take a closer look.

Learn how to buy blue chip stocks

Why You Should Learn How to Buy Blue Chip Stocks

The stock market is always susceptible to volatility. In general, no stock is immune to downturns. But some stocks have a history of solid performances no matter where the market is overall.

This is where blue chip stocks come into play. The term “blue chip” will be most recognizable to poker players. Yet blue chip stocks are much less of a gamble in the long run.

So what are blue chip stocks, exactly? Merriam-Webster actually has a formal definition. These are valuable stocks with sustained growth and stability. Moreover, they are established leaders in their respective industries.

To learn how to buy blue chip stocks, start by narrowing down your choices. These stocks generally have a large market cap, typically above $10 billion. They’re also regularly featured in the major market indexes, such as the S&P 500, the Nasdaq 100 and the Dow Jones Industrial Average.

Lastly, a good majority of blue chip stocks pay out dividends. These are regular payments to investors based on the company’s cash flows. You can learn more about these stocks in our article on the best dividend stocks.

Diversify Your Portfolio With Blue Chip Stocks

Every investment portfolio requires diversification to truly build in the right direction. In most cases, it’s not a good idea to fill the majority of your portfolio with one stock. This creates unnecessary risk that can lead to major losses.

You can create your own protection by diversifying your portfolio with various types of companies. And there’s no better place to start than blue chip stocks. The best blue chip stocks can become the foundation of your portfolio.

These stocks have a history of skyrocketing during good moments and bouncing back quickly during tougher times. For example, learn how to buy blue chip stocks by considering these prominent companies:

  • Amazon (Nasdaq: AMZN)
  • Alphabet (Nasdaq: GOOGL)
  • Apple (Nasdaq: AAPL)
  • Disney (NYSE: DIS)
  • Microsoft (Nasdaq: MSFT).

Believe it or not, a company like Tesla (Nasdaq: TSLA) is not considered a blue chip stock. This is because it doesn’t have a long history and track record of profitability.

It also doesn’t pay out dividends to shareholders. While it’s an extremely popular stock, blue chip investors would like to see some income from their investments.

The Power of the Stock Market

The stock market is regularly painted in society as something to be wary of. However, those with concerns or fears are missing out on a great opportunity to build passive income.

You can learn how to invest in stocks by signing up for our daily e-letter below. The experts at Investment U have decades of experience providing the latest market insights and analyzing the latest trends.

It makes no difference if you are a seasoned or a novice investor. Learn how to buy blue chip stocks and build a winning portfolio today.


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