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 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 large market capitalization.
- The underlying business has demonstrated resilience during economic downturns.
- It has inclusion in major stock market indexes.
- 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.
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) | $4.1 trillion | 0.37% | Technology Hardware, Storage and Peripherals |
| Berkshire Hathaway (NYSE:BRK.A) | $1.1 trillion | 0.00% | Diversified Financial Services |
| Coca-Cola (NYSE:KO) | $308.0 billion | 2.81% | Beverages |
| Johnson & Johnson (NYSE:JNJ) | $467.0 billion | 2.62% | Pharmaceuticals |
| American Express (NYSE:AXP) | $255.0 billion | 0.85% | Consumer Finance |
1. Apple
NASDAQ: AAPL
Key Data Points
Apple (AAPL -0.33%) 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, surpassing $4 trillion in late 2025.
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
NYSE: BRK.A
Key Data Points
Berkshire Hathaway (BRK.A +0.51%)(BRK.B +0.53%) 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
NYSE: KO
Key Data Points
Coca-Cola (KO +0.29%) 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
NYSE: JNJ
Key Data Points
NYSE: AXP
Key Data Points
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.
Risks of investing in blue chip stocks
While blue-chip companies have built reputations for reliably increasing sales and earnings over the long term and delivering strong returns for shareholders, investing in these stocks still comes with risks. Despite enjoying many competitive advantages, it is still possible for these companies to lose market share to rival players. In some cases, new innovations may even completely disrupt the business models of blue chip companies.
Blue chip stocks also tend to enjoy valuation premiums. Investors are often willing to pay more to own these stocks because the underlying companies have demonstrated strong performance and impressive longevity. If signs emerge that a blue-chip company's business is weakening, its stock can fall rapidly because investors become less willing to pay sales and earnings premiums associated with expectations that its competitive advantages will increase or remain intact.
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.
How to invest in blue chip stocks
- Open your brokerage app: Log in to your brokerage account where you handle your investments.
- 2. Search for the stock: Enter the ticker or company name into the search bar to bring up the stock's trading page.
- Decide how many shares to buy: Consider your investment goals and how much of your portfolio you want to allocate to this stock.
- Select order type: Choose between a market order to buy at the current price or a limit order to specify the maximum price you're willing to pay.
- Submit your order: Confirm the details and submit your buy order.
- Review your purchase: Check your portfolio to ensure your order was filled as expected and adjust your investment strategy accordingly.
Related investing topics
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.
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