Blue-Chip Stock: What Does It Mean?

A blue-chip stock is a share in a large, nationally recognized, financially sound company with a long history of reliable performance. The term comes from poker, where blue chips carry the highest value. Blue-chip companies — think Apple, Johnson & Johnson, or Coca-Cola — typically have strong balance sheets, consistent earnings, market leadership, and often pay steady dividends. They tend to be less volatile than smaller companies and are considered core holdings for conservative, long-term investors. Blue chips are often components of major indexes like the Dow Jones Industrial Average.