UK Accounting Glossary
Blue-chip stock is equity in the securities of high-quality companies. Blue-chip stock is often also high in public share price. Blue-chip stock is a term named after the blue-coloured highest poker chip denomination. Stock of “blue chips” or “blue-chip stock” demonstrate some combination of high credit rating, strong balance sheet, stable earnings power. A blue-chip stock usually has a diversified revenue base. Most Dow Jones Industrial Average (DJIA) companies fall into the category of blue-chip stock. A blue-chip stock is not limited to the thirty stocks in the Dow, blue-chip can imply any publicly traded stock in a leading international company listed in a foreign stock market. Blue-chip stock is often found in conservative investors and retirement portfolios. Volatility for blue-chip stock is typically lower than that of lesser-known, more thinly traded stocks. Blue-chip stock is often popular in market downturns for their ability to pay dividends no matter what the economic climate.
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This glossary post was last updated: 4th February 2020.