Blue chip stocks are generally less volatile than other stocks, but this doesn’t mean that they are a 100% safe investment. Even a blue chip stock can lose value and blue chip companies can face bankruptcy just like any other company. However, seen from a historical perspective, the stocks assigned the label “blue chip” by investors have – on average – been very good at weathering out harsh economic times and making nice profits when times are good. So, when an investor wants to make a stock portfolio more stable, blue chip stocks are normally the go-to choice.
There is no legal definition of blue chip stock, so different investors can have different opinions regarding certain stocks – do they qualify as blue chip or not? However, most investors agree that only a well-established and well-recognized stock company with a sound financial situation can be a blue chip stock company. Offering well-recognized and highly regarded products will also increase a company’s chance of being seen as a blue chip company. Last but not least, the stock price of a blue chip company will typically follow the S&P 500 stock market index.
The term blue chip is borrowed from poker, where the blue chip has traditionally been the most valuable one. According to Dow Jones folklore, Oliver Gingold was watching the stock ticker with Lucien Hooper at a brokerage firm one day back in early 1920. After noticing that several companies had shares selling for $200 or more, Gingolg told Hooper that he intended to go back to the office and write about “these blue-chip stock”. He nickname caught on, but for a long time the term blue chip stock simply referred to high prices stocks. Today, simply being high priced isn’t enough to be considered a blue chip stock.
Dow Jones Industrial Average
If you want to find blue chip stocks, the Dow Jones Industrial Average index is a good place to start. This index follows a select group of companies that aren’t just widely regarded as blue chip companies but also hailed as giants in their respective fields. Below, you will find a table with the 30 companies currently included in the Dow Jones Industrial Average. As you can see, many of them have been included for decades.
The industrial part of the Dow Jones Industrial Average index is there for historical reasons. Several of the companies included nowadays do not belong to any heavy industry niche.
(as Standard Oil of New Jersey)
|Oil & gas|
|Procter & Gamble||PG||NYSE||1932-05-26||Consumer goods|
(also 1924-01-22 to 1925-08-31)
(as United Aircraft)
(as Minnesota Mining
|Computers and technology|
|American Express||AXP||NYSE||1982-08-30||Consumer finance|
|Boeing||BA||NYSE||1987-03-12||Aerospace and defense|
|Caterpillar||CAT||NYSE||1991-05-06||Construction and mining equipment|
|Walt Disney||DIS||NYSE||1991-05-06||Broadcasting and entertainment|
|Johnson & Johnson||JNJ||NYSE||1997-03-17||Pharmaceuticals|
|The Home Depot||HD||NYSE||1999-11-01||Home improvement retailer|
|Oil & gas|
|Cisco Systems||CSCO||NASDAQ||2009-06-08||Computer networking|
|UnitedHealth Group||UNH||NYSE||2012-09-24||Managed health care|
|Goldman Sachs||GS||NYSE||2013-09-20||Banking, Financial services|