what is a blue chip stock 
a blue chip stock is stock issued by a large well established financially sound company with an excellent reputation normally such companies have operated for many years have dependable earnings and usually pay dividends to investors a blue chip company typically has a market capitalization in the billions it s generally the market leader or among the top three companies in its sector and more often than not is a household name for all of these reasons blue chip stocks can make good investments and are among the most popular stock purchases for investors some examples of blue chip stocks are ibm corp coca cola co microsoft american express mcdonald s and boeing co investopedia jessica olahunderstanding a blue chip stockwhile dividend payments are not absolutely necessary for a stock to be considered a blue chip most blue chips have long records of paying stable or growing dividends a blue chip stock is generally a component of the most reputable market indexes or averages such as the dow jones industrial average the standard poor s s p 500 and the nasdaq 100 in the united states the tsx 60 in canada or the ftse index in the united kingdom 