Glossary
Blue Chip
A blue chip is a stock of a large, well-established company with a long record of stable earnings and, often, dividend payments.
The term comes from poker, where blue chips carried the highest value. There is no official list; it is shorthand for household-name companies with dominant market positions and strong balance sheets.
Why it matters in practice
Blue chips are often perceived as safe, but individual companies — however established — can and do decline or fail; several one-time blue chips no longer exist. A diversified fund holding many large companies captures the blue-chip character without staking the outcome on any single firm, which is why concentration in one famous stock is a risk question, not just a quality question.
Related terms: Stock · Dividend · Market Capitalization · Diversification · Growth Stock