What are "blue-chip stocks"?

Blue-chip stocks refer to shares of well-established companies that have a history of stable earnings and reliable financial performance. These companies are typically leaders in their industries, and their stocks are considered a safe and secure investment, particularly in times of economic uncertainty. The term "blue-chip" is derived from poker, where blue chips hold the highest value. Investors often favor these stocks because they tend to provide consistent dividends and have a track record of long-term growth.

The stability and reliability associated with blue-chip stocks make them attractive to both individual and institutional investors who are seeking steady returns over time while minimizing risk. This characteristic distinguishes them from stocks of newly established companies, which may lack a proven business model, and from stocks of companies known for their unstable earnings or those that are highly speculative in nature, which carry a higher degree of risk and volatility.