What exactly are blue chip stocks and give some examples?

A blue chip stock is a stock that has stable earnings and no widespread liabilities. This term gets its name from the casino business. In a casino, the blue chips stand for counters of peak value.

But unlike a casino where your earnings are a gamble, blue chip stocks are a favorite with those who prefer stability.

In most of the cases, the blue chips pay regular dividends. They are great for the investors who look for a stable as well as stable income.

While they get their required share of stability and security, they have really a lot to pay for it! This is due to the fact that investors need to pay high value for these premium shares.

Blue chip stocks are those companies whose stocks have large market capitalization values. A few examples of such blue chip stocks are Royal Dutch Shell (petroleum), IBM (information technology), Procter & Gamble (consumer goods), The Coca-Cola Company (food) and American Express (financial services).

Since the term blue chip is also often used to denote the best players in their respective fields, it is a common phenomenon that these players are recruited by advertisers. They yield a high output value and are of immense value all round.