What are blue chip stocks?

Updated: Monday, July 30, 2012, 12:14 [IST]

Stocks of well established companies with a long standing proven track record of generating investor wealth and those that have consistently declared dividends over the years, irrespective of market trend are blue chip stocks.

These stocks are characterized as a high-quality and usually high-priced stock, as investor confidence in these companies are high.
These stocks help investors to accomplish their financial targets.

Blue chip companies are considered financially strong and reliable.

In the Indian context some of the blue chip stocks would be those that form part of the Sensex and Nifty stocks. Example would include Larsen and Toubro, Hindustan Unilever, ITC, Bajaj Auto etc.

Some of these stocks are high capitalisation stocks. However, there is no guarantee that investment in blue chip stocks would always fetch returns.

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