Blue chip stocks are the stocks of well-known, high-quality companies that are industry leaders. These companies have stood the test of time and are respected by their customers and shareholders. Blue chip companies have solid business models and impressive records of returns for investors. These returns often include regular and growing dividend payments.
Blue chip stocks' attractive risk-reward profiles make them among the most popular for conservative investors. However, even more risk-tolerant investors should consider buying blue chip stocks to diversify their portfolios and provide stability during turbulent stock market conditions.
What are they?
What is a blue chip stock?
So, what are they? A blue chip stock is defined as a security that represents an equity position in a company that meets most of the following criteria:
- It's an industry leader with a dependable business model.
- It has a strong reputation with consumers and shareholders.
- It has a history of delivering strong returns over the long term.
- It pays dividends to shareholders and makes regular increases to its payouts.
How do blue chip stocks work?
Like other stocks, blue chip stocks grant their owners a position in the underlying company. The difference between blue chip stocks and other stocks is that blue chip companies have long histories of delivering strong results and reputations for performing at the top of their respective industries. In most cases, blue chip stocks also pay dividends -- which means that shareholders can receive regular cash checks simply for owning shares.
As with other stocks, the performance of blue chip stocks tends to correlate with their earnings results over the long term. If a blue chip company lives up to or exceeds earnings expectations, it likely has a good chance of delivering solid returns for its shareholders. Blue chip companies have typically been able to grow into large market capitalizations and build long track records of dividend payouts and payout growth thanks to strong earnings performance, and these characteristics make them appealing options for investors seeking long-term growth in the market without the need to take on huge risk.
Top five
Best blue chip stocks to buy right now
Even if you've never invested in the stock market, you'll recognize the names of many top blue chip stocks. These large-cap companies provide products and services that billions of people worldwide use daily. Here are five of the best blue chip companies on the market:
| Blue chip company | Market cap | Dividend yield | Industry |
|---|---|---|---|
| Apple (NASDAQ:AAPL) | $3.8 trillion | 0.40% | Technology Hardware, Storage and Peripherals |
| Berkshire Hathaway (NYSE:BRK.A) | $1.1 trillion | 0.00% | Diversified Financial Services |
| Coca-Cola (NYSE:KO) | $287 billion | 3.02% | Beverages |
| Johnson & Johnson (NYSE:JNJ) | $448 billion | 2.73% | Pharmaceuticals |
| American Express (NYSE:AXP) | $229 billion | 0.93% | Consumer Finance |
1. Apple
Apple (AAPL 0.89%) is one of the world's most profitable companies. Throughout its history, it has pioneered advancements in the technology sector.
The company innovated with its Macintosh computers in the 1980s and made media portable with its iPods in the early 2000s. Its iPhones, iPads, and Apple Watches are ubiquitous today. In a world where consumers flock to the latest tech fads, Apple's products enjoy notable loyalty from its customer base.
Apple also earns recurring revenue through its services, which include iTunes, the App Store, and its streaming television businesses. In 2018, Apple's market capitalization climbed past the $1 trillion mark to an unprecedented $2 trillion in 2020.
The tech giant then became the first company to reach a $3 trillion market cap. Its valuation marched even higher from there.
While the company's valuation has sometimes fluctuated in conjunction with volatility in the broader market and business-specific developments, the tech giant's stock has been an excellent performer for long-term investors. Apple has been among the largest public companies for a long time, and the business still has room for growth over the long term.
2. Berkshire Hathaway
Berkshire Hathaway (BRK.A -0.47%)(BRK.B -0.88%) is a major player in the insurance industry. Through its subsidiaries, GEICO and Gen Re, Berkshire offers various lines of commercial and personal insurance. However, Berkshire also owns a diverse set of businesses.
For example, Berkshire owns restaurant chain Dairy Queen, railroad giant BNSF, and utility company Berkshire Hathaway Energy. It also owns water companies, consumer apparel businesses, battery brands, and more.
Beyond its subsidiary businesses, the investment conglomerate owns a large portfolio of publicly traded stocks. With such a broad range of businesses, the company has a reputation for safety, security, and consistent performance.
Berkshire Hathaway is the only blue chip stock on this list that doesn't pay a dividend. CEO Warren Buffett has one of the most impressive track records of market-beating returns in history and prefers investing the company's cash over paying dividends.
His strategy has worked out great for shareholders, but at least one big change is on the horizon. At the end of 2025, Buffett will step down as CEO and be replaced by current Vice Chairman Greg Abel.
3. Coca-Cola
Coca-Cola (KO -1.33%) has been a leader in the beverage industry for more than a century, with its namesake soft drink spawning a global empire. Yet, Coca-Cola has also changed with the times and now provides a much broader array of products, including juices, sports drinks, and bottled water tailored for more health-conscious consumers.
Coca-Cola particularly stands out for increasing its dividend. Its streak of consecutive annual dividend payment increases dates back to the early 1960s, a track record that places it among the top 10 dividend stocks on the market.
4. Johnson & Johnson
Johnson & Johnson (JNJ -0.2%) is well known for its popular consumer products, including baby shampoo, Band-Aids, and Tylenol pain reliever. However, through a stock spinoff completed in May 2023, J&J separated its consumer health products business into Kenvue (KVUE -0.16%), a new company in which it still owns a majority position.
Even with the spinoff, J&J is a true healthcare giant that makes a wide array of medical devices to help doctors and other medical professionals perform life-saving procedures. Johnson & Johnson also has a vast pharmaceutical business and produces drugs such as the arthritis treatment Remicade, the prostate cancer drug Zytiga, and the psoriasis drug Stelara.
Spinning off Kenvue has also positioned J&J for better growth because the consumer health products business was generally considered the weaker of the company's segments. Johnson & Johnson has been restructured around its highly regarded pharmaceuticals and medical devices segments, and these businesses have promising long-term growth outlooks.
5. American Express
Financial giant American Express (AXP 0.3%) is another blue chip stalwart to consider. It's both a credit card company and a payment network. Its main revenue generators are credit card fees and transaction processing fees. With new users and higher transaction volume, the company is poised to increase both revenue streams.
It's more than 170 years old, but it's staying relevant. The company's cards have surged in popularity among millennials and Gen Z consumers. Those younger age demographics are driving account registrations and accounting for a third of overall spending through the AmEx network.
American Express' management believes it can expand profits at a double-digit pace in the years to come. It plans to pay out roughly a quarter of its profits as shareholder dividends and announced a 17% increase in its dividend in March 2025. Ongoing earnings growth should lead to additional increases in future years.
A bigger list
A bigger list of blue chips
Investors have a sizable number of blue chip stocks to choose from. Here's a list of 20 more:
| Blue chip company | Market cap | Dividend yield | Industry |
|---|---|---|---|
| AbbVie (NYSE:ABBV) | $432 billion | 2.65% | Biotechnology |
| Nike (NYSE:NKE) | $110 billion | 2.16% | Textiles, Apparel and Luxury Goods |
| Lockheed Martin (NYSE:LMT) | $116 billion | 2.65% | Aerospace and Defense |
| Honeywell International (NASDAQ:HON) | $133 billion | 2.15% | Industrial Conglomerates |
| Procter & Gamble (NYSE:PG) | $359 billion | 2.69% | Household Products |
| Mastercard (NYSE:MA) | $519 billion | 0.51% | Diversified Financial Services |
| JPMorgan Chase (NYSE:JPM) | $854 billion | 1.71% | Banks |
| Walmart (NYSE:WMT) | $813 billion | 0.89% | Food and Staples Retailing |
| Microsoft (NASDAQ:MSFT) | $3.9 trillion | 0.64% | Software |
| Caterpillar (NYSE:CAT) | $225 billion | 1.19% | Machinery |
| UnitedHealth Group (NYSE:UNH) | $315 billion | 2.47% | Healthcare Providers and Services |
| Starbucks (NASDAQ:SBUX) | $96 billion | 2.89% | Hotels, Restaurants and Leisure |
| Oracle (NYSE:ORCL) | $821 billion | 0.62% | Software |
| Northrop Grumman (NYSE:NOC) | $87 billion | 1.44% | Aerospace and Defense |
| McDonald's (NYSE:MCD) | $214 billion | 2.36% | Hotels, Restaurants and Leisure |
| Home Depot (NYSE:HD) | $395 billion | 2.30% | Specialty Retail |
| Kroger (NYSE:KR) | $44 billion | 1.97% | Food and Staples Retailing |
| Merck (NYSE:MRK) | $225 billion | 3.59% | Pharmaceuticals |
| Intel (NASDAQ:INTC) | $168 billion | 0.00% | Semiconductors and Semiconductor Equipment |
| Goldman Sachs Group (NYSE:GS) | $238 billion | 1.65% | Capital Markets |
Why invest?
Investing in blue chip companies
Blue chip stocks are smart choices for investors of all kinds. Beginning investors are likely familiar with the products and services of blue chip companies. Familiarity with a company makes buying shares more comfortable, and it's exciting to become a partial owner of a business you know.
Meanwhile, long-time investors will likely have an understanding of the underlying business performance for various blue chip stocks through the years. This may lend them insights into which companies are positioned to continue thriving.
Investors of all experience levels can appreciate the general stability and reliability that blue chip businesses offer shareholders. Many of these companies pay great dividends and have payout growth streaks that have earned them a spot among the illustrious ranks of the Dividend Kings, companies that have increased their dividends for at least 50 years.
Blue chip funds
Hands-off investing with blue chip funds
Investors interested in blue chips may also want to consider exchange-traded funds (ETFs) and mutual funds. Blue chip-focused ETFs and mutual funds bundle numerous blue chip stocks into a single security, offering a simple way to diversify across many high-quality stocks and build exposure to industries ranging from technology and hardware to pharmaceuticals and electric utilities.
These investment vehicles also tend to be less volatile than individual stocks, making them particularly appealing to people who are retired or nearing retirement. Blue chip ETFs and mutual funds can also be a good fit for younger investors seeking the defensive advantages of diversification and those without the time to research individual stocks adequately.
Alternatively, blue chip ETFs can offer a narrower concentration of high-quality stocks than an S&P 500-tracking ETF or a Nasdaq-tracking ETF.
Related investing topics
A balanced portfolio
Blue chips in a well-balanced portfolio
If you're looking for maximum growth in your stock investments, you'll also want to look beyond blue chip stocks at some up-and-coming small-cap stocks of innovative young companies seeking to disrupt their larger rivals. These high-growth upstarts aim to be the blue chip companies of tomorrow.
However, just about every investor can benefit from having a portion of their portfolio invested in blue chip stocks. It doesn't have to be a set percentage; investors will have varying viewpoints about how much risk they want to assume.
But the more you want to preserve and protect the money you have invested in the stock market, the more attractive blue chip stocks will be as you try to meet your objectives and reach your long-term financial goals.
FAQ
Blue chip stocks FAQ
What are blue chip stocks?
Blue chip stocks are those of large, well-known, and widely respected companies. Most of these companies pay dividends and have many decades of profitable operation under their belts.
How many blue chip stocks are there?
There is no singular definition for what constitutes a blue chip stock, and no official count on how many blue chip stocks there are. Blue chip stocks are typically part of the S&P 500, the Nasdaq-100, or the Dow Jones Industrial Average, and each of these major indexes has separate requirements that determine whether a stock is eligible for inclusion.
Some stocks are included in more than one of these indexes. All of the 30 stocks included in the Dow Jones index are typically considered blue chips, but not all of the stocks in the S&P 500 and the Nasdaq-100 are blue chips.
What are the blue chip stocks in the U.S.?
The U.S. hosts more blue chip companies than any other country. Apple, Berkshire Hathaway, Coca-Cola, Johnson & Johnson, and American Express are all blue chip stocks with operations primarily based in the U.S.
AbbVie, Nike, Lockheed Martin, Honeywell, Northrop Grumman, and Procter & Gamble are additional examples of blue chip companies that are headquartered in the country. Many blue chips generate a substantial amount of their sales and earnings from other geographic markets, but most lists of blue chip stocks are primarily made up of U.S.-based companies.
Are blue chip stocks worth it?
Owning blue chip stocks is a smart move for most investors. They are often appealing as long-term investment candidates because they are backed by dependable, high-quality businesses.
Blue chip companies typically have powerful competitive advantages and decades of profitable operations under their belts. While they may grow more slowly than younger companies still in the earlier stages of addressing market opportunities, they still offer investors the chance to achieve strong returns and have much lower risk.
Are blue chip stocks safe to invest in?
On average, blue chip stocks are significantly safer than most stocks on the market. Blue chip stocks are backed by businesses with strong earnings histories and market positioning.
Alternatively, investing in these companies still comes with risk -- and each stock has to be evaluated based on its individual strengths and risk factors. Blue chip stocks can still see big valuation declines if their sales and profits come in below expectations or there are signs that the underlying company's competitive advantages are weakening.
What are the disadvantages of blue chip stocks?
Blue chip stocks tend to be safer investments because the underlying companies are well established and have strong competitive advantages, but that certainly doesn't mean they're risk-free. Blue chip companies can still struggle amid macroeconomic challenges and market shifts or be disrupted by competitors if they fail to keep pace with innovations in their key industries.
Additionally, well-established blue chip companies may be growing at relatively slow rates compared to younger players. While blue chip stocks tend to be significantly safer than less proven alternatives, this also means they may offer smaller upside potential.
Is Apple a blue chip stock?
Apple is a blue chip stock. The company is a clear leader in its corner of the technology industry and has powerful competitive advantages. The tech giant has a fantastic history of delivering earnings growth and frequently ranks as the world's most profitable company. Apple stock also reliably pays a dividend.
Is Nvidia a blue chip stock?
Nvidia has some of the markers of a blue chip stock. The company has a strong leadership position in graphics processing unit (GPU) technologies that are powering the artificial intelligence revolution. The company is enormously profitable and has been added to the Dow Jones Industrial Average. It's also a component of the S&P 500 and the Nasdaq-100.
On the other hand, Nvidia's incredible rise is still a relatively recent development. There's no singular definition or set of criteria for being a blue chip stock, and Nvidia could eventually be commonly found in the category, but the artificial intelligence (AI) leader may need to build a longer track record of success before broadly receiving that classification.
Is Coke a blue chip stock?
Coca-Cola is a blue chip stock with a highly profitable business and an almost unparalleled history of returning cash to shareholders through dividends. The company owns one of the world's most powerful collections of brands and has one of the largest and most powerful infrastructure and distribution networks in the consumer goods sector.
Thanks to its competitive advantages, Coke has delivered consistent earnings growth and increased dividends annually for more than six decades.
What are the best blue chip stocks to buy right now?
Buying blue chip stocks is a good way for investors to build positions in top companies that offer reasonable risk-reward profiles. But there's no perfect, one-size-fits-all recommendation.
You should always calibrate stock purchases with your personal goals, industry expectations, and outlooks in mind. The good news is that companies in the broader blue chip category will likely be solid long-term investments, and investors have a sizable group of appealing stocks to choose from.
How to find blue chip stocks to invest in?
If you're looking to find top blue chip stocks to invest in, taking a look at the 30 companies included in the Dow Jones Industrial Average would be a good way to start. Analyzing the sales, earnings, competitive strengths, and overall valuation profiles of the companies included in the index will help you build risk-reward profiles.
You can then assess whether an individual blue chip stock's outlook and risk-reward profile are in line with your risk tolerance and investment goals. If you're interested in blue chip stocks that aren't included in the Dow, consider using the same approach with companies in the S&P 100.
