blue chip

Blue Chip Stocks: How to Invest in Blue Chip Stocks

In 1923, Oliver Gingold, who worked at Dow Jones, came up with the term “blue chip” to talk about stocks. He used it to describe stocks that were worth $200 or more per share. This term comes from “poker chips”, which are usually blue, white, and red. In poker, blue chips have the highest value. 

However, today, when we talk about blue chip stocks, we don’t necessarily mean stocks that cost a lot. We’re referring to stocks of high-quality companies that can remain stable despite market fluctuations. In other words, they are a category of stocks that are stable, valuable and established. They’re mostly stocks of top and well-established names. 

What are Blue Chip Stocks?

Blue chip stocks are typically part of well-known market indexes like the Dow Jones Industrial Average, the Standard & Poor’s (S&P) 500, and the Nasdaq-100 in the United States. In Canada, they’re part of the TSX-60, and in the United Kingdom, they’re linked to the FTSE Index. These stocks are usually found on major stock exchanges like the NYSE, and the Nasdaq and usually pay dividends. Let’s look at some examples.

Examples of Blue Chip Stocks in Nigeria

Cadbury Nigeria PLC (CADBURY)

Flour Mills of Nigeria (FLOURMILL)

Unilever Nigeria PLC (UNILEVER)

Guinness Nigeria (GUINNESS)

Nestle Nigeria PLC (NESTLE)


Dangote Cement

MTN Nigeria

Zenith Bank


FBN Holdings

Stanbic IBTC


Airtel Africa 


BUA Cement 


Other Examples of Foreign Blue Chip Stocks



Berkshire Hathaway


UnitedHealth Group


Proctor & Gamble



IBM Corp.



IBM CorpMicrosoft

 American Express


Boeing Co.

How to Trade Blue Chip Stocks

You can invest in them by using online brokerage firms or by investing in blue-chip funds. Because some of them have expensive shares, some people choose to invest in them through fractional trading options like Trove Finance which is easier and straightforward.

Advantages and Disadvantages of Investing in These Stocks

Robust financial performanceLimited potential for high returns
Possibility of consistent dividend payoutsRelatively low dividend yields
Reduced risk of significant lossesSlower capital growth
Lower susceptibility to price fluctuationsMay not outperform benchmark or index returns
Steady, reliable long-term returnsTypically lacks the potential for substantial gains (multi-bagger)

Read Also: Dividend Stocks: What it Means and How it Works

Are Blue Chip Stocks a Good Investment?

They are usually seen as very safe investments because they come with strong financial foundations, consistent cash flows, well-established business models, and a history of growing dividends. This track record and performance history make them a reliable choice for investors. That’s also why you’ll see the term beside only the top companies in the stock market.

Previous Post
dividend stocks

Dividend Stocks: What it Means and How it Works

Next Post
long term vs short term

Long-Term Vs Short-Term Investments: Which is the Better Strategy for Your Portfolio?

Related Posts