Blue Chip Stocks: 9 Reasons Why You Need Them In Your Portfolio

Blue-chip stocks are the ivy league of investment stocks. They are shares of companies known for steady cash flow, solid balance sheets, reliable business structure, and excellent performance history.

It’s vital to have blue-chip stocks in your portfolio. But before we dive into that, let’s have a quick overview of blue-chip stocks.

1. Safe Dividends

Your primary concern as a dividend investor is the safety of your dividends. That is, you continue to steadily receive your share of the company’s earnings.

2. High Returns on Investment

Blue-chip stocks can return up to 12% when you ideally reinvest your dividends. It’s best you automatically reinvest your dividend and returns.

3. Safe Harbor Stocks

Blue-chip stocks tend to be safe harbor stocks. They are less volatile than penny stocks and smaller companies’ stocks.

4. Brand Recognition

Blue-chip stocks are popular, recognizable brand names. This means you can get regular updates on the companies’ progress through mainstream media.

5. Liquidity and Ease of Access

Because they are popular, blue-chip stocks are easy to buy and sell. You will appreciate this benefit more when you try to sell unpopular stocks.

6. Diversification

Blue-chip companies are typically diversified along product lines, demographics and location.

7. Diversified Portfolio

When you invest in blue-chip companies, you secure a part of your portfolio against volatility. These companies will allow you to hedge against losses due.

But blue-chip stocks can also go down when the broader market takes a hit. However, they are less volatile than smaller growth companies and usually recover first when the market bounces back.

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