Blue-chip stocks are shares of huge and well-recognized companies with a long history of sound financial performance. These stocks are known to have the capability to endure tough market conditions and give high returns in good market conditions. Blue-chip stocks generally cost high, as they have a good reputation and are often market leaders in their respective industries.
Why Blue Chip Stocks Are Popular
One of the reasons investors love blue-chip stocks so much is that they tend to have steady rates of return. You may see dramatic swings in value, which can be stressful and make it difficult to know when to buy or sell. Blue-chip stocks may change in value, but you’re unlikely to see dramatic swings in price.
Features of Blue-chip Stocks
The features of Blue-chip stocks are enlisted below –
● Good Returns
Blue-chip stocks generate returns quarterly in the form of dividends.
● Risk factor
Investors can reduce the burden of risk associated with blue-chip shares by diversifying their investment portfolio.
Blue-chip companies are those large companies that have reached their maximum growth potential. This influences the Blue-chip shares who undergo slow but steady growth over time.
The profit generated through blue-chip shares in India is treated as income under Section 80 C of the Income Tax Act.
Reasons to Invest In Blue-Chip Stocks
Blue-chip stocks in India are considered a good investment for achieving long-term financial goals as-
● It offers higher returns that are paid quarterly.
● Facilitates corpus building.
● Facilitates portfolio diversification.
● Cushions the impact of the recession, inflation, and economic stagnation.
Best Blue Chip Stocks in India
Here is a list of the top 10 blue-chip stocks that well know in the stock market:
● Indian Tobacco Company (ITC) Limited
● Hindustan Unilever Limited (HUL)
● Reliance Industries
● Tata Consultancy Services (TCS)
● Oil and Natural Gas Corporation (ONGC)
● Housing Development Finance Corporation (HDFC)
● Eicher Motors
● Sun Pharmaceuticals Industries Limited
● State Bank of India (SBI)
Blue-chip stocks are the publicly traded companies generally regarded as one of the biggest and best in their industry. Their wide economic moats allow them to generate consistent free cash flow, which brings about consistent dividend payments. They are the favoured type of stock for conservative investors looking to live off dividend income or reinvest the dividends for compounded wealth building.