Not yet registered? Create a OverBlog!

Create my blog

What does it take to be a blue chip company?

A blue chip company is one that is considered a safe investment. It will not have wild swings in its stock price, especially to the downside, and it pays a decent dividend. Blue chip companies are in established businesses. They are large and liquid enough to survive in bad times and thrive in good times. In this article, find out all that it takes to be a blue chip company.

Blue chip metrics

A blue chip stock is judged by the company's dividend, debt, earnings, revenues and profit margins. Dividend Most blue chip shares pay at least a 2% dividend - some considerably higher. However, some tech companies can be considered blue chip even though they use their cash to grow instead of distributing it to shareholders. Debt Many blue chip companies have cash on the balance sheet. If there is debt, it should be minimal enough to be easily handled by the cash flow. Revenue and earnings The revenues of blue chip companies typically grow at a modest, but steady pace. The earnings should grow consistently, though in times of economic slowdown, earnings may be flat or even negative. Profit margin Blue chip companies typically have stable or slightly improving profit margins that are at or above the average for their industries.

Some blue chip companies

ExxonMobil (XOM) Of all the companies that are considered blue chip, Exxon tops the list. Nobody thinks that the oil business will fade any time soon. The company has stable profits, revenues, dividends, and minimal debt. CSX Goods always have to be moved from one place to another. The railroad companies will be necessary to the economy for as long as one can predict. CSX is a leader in the rail industry. They have dips in profits when the economy is in recession, but the dividend is secure, the debt is well under control and the company is large enough to survive any economic downturn. Microsoft (MSFT) Tech stocks are considered risky because technology changes rapidly. However, a company like Microsoft is considered blue chip because its products are so integral to the working of the economy. Microsoft has a lot of cash on the balance sheet to see it through any hard times. Though it has no dividend, Microsoft has consistent earnings and revenues, and will use its cash to grow. Walmart (WMT) Retailers like Walmart feel the economic cycle more than other sectors. However, a large company as Walmart can weather the economic downturns and thrive in good economic times. Its dividend is modest, but its debt is minimal when margins hold steady.

Same category articles Stock exchange

How to find the Exxon stock price

How to find the Exxon stock price

Exxon Mobil Corp., one of the largest companies in the world, is the giant of the oil industry. Shares are traded on the New York Stock Exchange under the symbol XOM. As a bellweather of the American economy - in fact of the world economy - Exxon Mobil's stock price quotes can be obtained from any broker worldwide, and any online website which deals in financial news. Most hairdressers and salesmen probably know it too.
How to find the BHP Billiton share price

How to find the BHP Billiton share price

BHP Billiton Ltd. is the world's largest mining company and the third largest company in the world by market capitalisation. Its headquarters are in Australia, but it is listed on the London and New York stock exchanges with ticker symbol BHP. This article will show you how to find BHP Bilton share price.
How does the stock market work?

How does the stock market work?

The stock market has now fully entered the digital age, and most shares are traded electronically. Formerly, individual 'specialists' did all the trading. They are now involved in a minority of transactions, though there are many who think that an increased role for human beings is essential to prevent meltdowns like last year's 'flash crash.'
A guide to free stock price quotes

A guide to free stock price quotes

Free stock quotes, news, reports and ratings can be obtained through various traditional and online sources. Many people still rely on free stock information provided by financial newspapers and business television channels. This article shows that a number of leading financial websites also offer latest stock information and live quotes, along with technical analysis for free to their readers.