Are blue chip stocks a good investment now? (2024)

Are blue chip stocks a good investment now?

It's generally the market leader or among the top three companies in its sector, and, more often than not, is a household name. For all of these reasons, blue chip stocks can make good investments and are among the most popular stock purchases for investors.

Blue-chip stocks typically have solid balance sheets, steady cash flows, proven business models, and a history of increasing dividends. For that reason, investors generally consider blue-chip stocks to be among the most secure stock investments because of their track records and performance history.

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.

Blue-chip growth stocks are not made overnight. These stocks represent companies that have built their business over years or decades. This comes through a good management team focusing on innovation and industry tailwinds, among other factors.

Although blue chips are reliably stable, they are unlikely to generate the same high returns as potentially riskier investments. Despite their stability, blue chip stocks can experience volatility and failure, as did some during the 2007-2008 financial crisis.

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.

Blue chip stocks FAQ

Blue chip stocks are stocks of large, well-known, and widely respected companies. Most of these companies pay dividends and have many decades of profitable operation under their belts.

Microsoft Corporation (NASDAQ:MSFT), Visa Inc. (NYSE:V), and Apple Inc. (NASDAQ:AAPL) are some of the best blue chip dividend stocks among others that are mentioned below in our list.

Are blue-chip stocks good for retirement?

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.

As a small example, Costco Wholesale (NASDAQ:COST) has trended higher by 226% (capital gains) in the last five years. This has led to this list of blue-chip stocks under $20.

Market Volatility: Although Blue Chip stocks are less volatile than smaller-cap firms, market movements can nevertheless harm them. Economic Downturns: Even Fortune 500 corporations are not immune to economic downturns. The value of their stock may fall during severe economic downturns.

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.

Blue-chip stocks are from companies that are large, well-established, and financially sound. These companies have strong brand names and reputations, and they generate dependable earnings. Blue-chip companies usually boast consistent dividends and are often considered to be less risky, given their financial stability.

The stock market is full of opportunities, but blue-chip stocks are the way to go when it comes to reliable, long-term investments. These companies are the cream of the crop, with solid financials, strong market positions, and a history of weathering economic storms.

Fidelity Blue Chip Growth: Performance Highlights

The fund's excess returns have also been mostly consistent: Over the 140 monthly rolling three-year periods on Kalra's watch, the fund outperformed the index three fourths of the time and nearly always landed in the category's top third.

Which stock will boom in 2024?

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.

In addition to Visa, Warren Buffett also enjoys dividends from Chevron Corp (NYSE:CVX), Coca-Cola Co (NYSE:KO) and American Express Company (NYSE:AXP). In its October 2023 investor letter, Lakehouse Capital stated the following regarding Visa Inc. (NYSE:V):