Before buying stocks, you should consult an investment advisor, or another professional advisor, in addition to performing your own research on the best-performing companies. Evaluate the recent annual and quarterly published reports of stocks to understand their performance. And also to understand any changes in the management of the company. In this article, we will talk more about how to invest in blue chip.
Analyze the company’s performance for the last decade to know the dividend payments trend and the reported earnings. Looking at the historical performance over a long period of time. It will give a more precise indication of a company’s performance during both boom and bust cycles.
Compare several high-quality stocks and decide which ones to invest in based on your stock evaluations and your personal investment goals. The SEC recommends stock diversification to minimize risks, and you can choose several premier stocks to start with.
What is Blue Chip?
A blue chip is a stock of a well-established corporation with a reputation for reliability, quality, and financial stability. Blue chip stocks are usually the market leaders in their sectors and have a market capitalization running into billions of dollars. They are the most popular stocks to buy, due to their long track records of steady earnings or paying dividends.
Many stock market investors prefer blue chip stocks due to their stable earnings. Blue chip stocks usually pay increasing and consistent dividends over time to at least partially make up for any temporary declines in the stock’s price. During economic slowdowns, investors turn to blue chip stocks to protect their investments. For example, during the financial crisis in the last decade, some blue chip companies survived the crisis. Thus, during the COVID-19 pandemic is the best time to invest in blue chip.
Investors who held shares in these companies were able to recover their earnings. Investors in blue chip stocks are generally assured of receiving regular dividend payments and having their portfolios protected against inflation.
How to invest in Blue chip?
You can purchase stocks individually through a brokerage firm. You also can buy a basket of stocks by investing in mutual funds or ETFs. If you are buying stocks through a brokerage, you can choose an online broker, a full-service broker. Once an account is opened and you have provided all the necessary documentation. You will need to make a deposit with the broker. You can then place your first buy order for the number of shares you want to buy of a given stock.
Some mutual funds or ETFs use “Blue Chip” in their name and contain a list of the best-performing stocks in various sectors. For example, Bridgeway Blue Chip 35 Index invests more in technology companies and less in consumer discretionary companies. Vanguard’s Dividend Appreciation ETF (VIG) tracks the Dividend Achievers Select Index, an index that lists U.S. companies that have increased their dividend payments in the last 10 or more consecutive years.