Is it wise to invest in blue-chip stocks?
Blue chip stocks are usually less risky and thus considered safer than other stock-based investment options. That's because one of the major determining factors of a blue chip stock is that it must be a well-capitalized company, meaning it should have the financial fortitude to endure an inevitable economic downturn.
Blue chip companies have solid business models and impressive track records of returns for investors. These returns often include regular and growing dividend payments. The blue chip stocks' attractive risk-reward profiles make them among the most popular for conservative investors.
Yes, Blue Chip Funds can generally be good investments. They focus on well-established, financially stable companies, offering stability and the potential for consistent returns. However, suitability depends on your financial goals and risk tolerance.
In general, the average rate of return on blue-chip stocks is around 10%, which is similar to the indices that they are featured on. A good indicator of blue-chip status is if the company is listed on a renowned stock index.
Conclusion. Blue Chip companies are a good place to start if you want to establish a steady and diverse portfolio. They provide an attractive investment opportunity due to their history of market stability, dividends, and capital appreciation potential.
| S.No. | Company | Industry/Sector |
|---|---|---|
| 1. | Tata Consultancy Services Ltd | IT - Software |
| 2. | Infosys Ltd | IT - Software |
| 3. | Hindustan Unilever Ltd | FMCG |
| 4. | Reliance Industries Ltd | Refineries |
Cons of Blue chip stocks
Lower Growth Potential: Despite the fact that blue chip stocks often have solid profitability, their rate of growth is typically slower than that of other equities because of the markets they participate in.
- Reliance Industries Ltd. Conglomerate.
- Tata Consultancy Services Ltd. Information Technology.
- Infosys Ltd. Information Technology.
- HCL Technologies Ltd. Information Technology.
- Hindustan Unilever Ltd. Fast-Moving Consumer Goods.
- ITC Ltd. ...
- Nestle India Ltd. ...
- HDFC Bank Ltd.
Investing in fundamentally strong blue-chip stocks is a proven strategy to build long-term wealth. Typically, blue-chip companies enjoy multiple competitive moats and market-leading positions, allowing them to generate stable cash flows across market cycles.
Because blue chip companies are relatively stable, blue chip stocks are considered a low-risk investment. In all likelihood, no matter what happens tomorrow, the most established companies in the banking or real estate sector would not collapse overnight, so investing in them is a relatively safe bet.
Is Costco a blue-chip stock?
By investing in blue-chip stocks, investors can build a well-diversified portfolio. Here, we have identified three stocks from the Retail - Wholesale sector — Walmart Inc. WMT, The Home Depot, Inc. HD and Costco Wholesale Corporation COST.
| Company | Performance (Year) |
|---|---|
| Netflix Inc. (NFLX) | 83.88% |
| Applied Materials Inc. (AMAT) | 80.20% |
| KLA Corp. (KLAC) | 79.89% |
| Advanced Micro Devices Inc. (AMD) | 77.90% |
| Stocks | Sector | 12-month dividend yield |
|---|---|---|
| Exxon Mobil Corp. (XOM) | Energy | 3.8% |
| Walgreens Boots Alliance Inc. (WBA) | Health care | 7.6% |
| PepsiCo Inc. (PEP) | Consumer defensive | 3% |
| McDonald's Corp. (MCD) | Consumer cyclical | 2.1% |
How do I invest in blue-chip stock? You can purchase blue-chip stocks through online brokerage firms or gain access to them through blue-chip funds. Given the high price-tag per share for some blue-chip stocks, some investors are opting to buy into these companies through fractional trading offerings.
Blue chips may be lower-risk investments but they are still vulnerable to market risks as well as company-specific risks. A market sell-off can lead to a sell-off of blue-chip stocks.
| Stock | Expected Change in Stock Price* |
|---|---|
| Tesla Inc. (TSLA) | 61% |
| Mastercard Inc. (MA) | 14.2% |
| Salesforce Inc. (CRM) | 7.2% |
| Advanced Micro Devices Inc. (AMD) | 11.3% |
| S.No. | Name | 1mth return % |
|---|---|---|
| 1. | Hindustan Zinc | 38.41 |
| 2. | Lloyds Metals | 26.28 |
| 3. | NMDC | 16.74 |
| 4. | Apar Inds. | 15.58 |
| Stock | Sector | Trailing 12-month dividend yield* |
|---|---|---|
| Abbott Laboratories (ABT) | Health care | 1.9% |
| Stanley Black & Decker Inc. (SWK) | Industrials | 3.5% |
| Atmos Energy Corp. (ATO) | Utilities | 2.7% |
| T. Rowe Price Group Inc. (TROW) | Financials | 4.3% |
- SoundHound AI and Sweetgreen are up 174% and 116% so far in 2024.
- SoundHouse AI is seeing its platform for conversational intelligence explode in popularity.
- Sweetgreen has quadrupled over the past year, but it's still a broken IPO with potential to harvest.
Some examples of blue chip stocks are Coca Cola, Apple, IBM, American Express, McDonalds, DuPont, and American Express.
When should you sell a stock?
Always sell a stock it if falls 7%-8% below what you paid for it. This basic principle helps you always cap your potential downside. If you're following rules for how to buy stocks and a stock you own drops 7% to 8% from what you paid for it, something is wrong.
These blue-chip stocks will continue to provide market-beating returns in April. Amazon Inc (AMZN): This tech behemoth is firing on all cylinders following its highest-ever monthly close. Netflix Inc (NFLX): The streaming giant is bolstering up its lineup with newly added premium tiers.
| Company (ticker) | Market Capitalization |
|---|---|
| AT&T (T) | $123.2 billion |
| CVS Health (CVS) | $92.5 billion |
| Ford Motor (F) | $53.8 billion |
| Kraft Heinz (KHC) | $45.1 billion |
ROA checks a company's assets and liabilities – it evaluates whether a company is utilising its assets wisely. Blue chip companies will usually display a higher ROE and ROA. As with most of the considerations in this list, you should observe these ratios with regards to the company in question for the past 5 years.
At age 60–69, consider a moderate portfolio (60% stock, 35% bonds, 5% cash/cash investments); 70–79, moderately conservative (40% stock, 50% bonds, 10% cash/cash investments); 80 and above, conservative (20% stock, 50% bonds, 30% cash/cash investments).
