Blue-Chip Stock

The term 'blue chip' comes from poker, where blue chips have the highest value. In investing, blue-chip stocks are shares of industry-leading companies with decades of operating history, strong balance sheets, and typically a consistent dividend. Think Apple, Microsoft, Johnson & Johnson, or Coca-Cola — companies that have survived multiple recessions and market crashes.

Blue chips tend to be less volatile than smaller, growth-oriented stocks (lower beta) and are favored by institutional investors and retirees for their stability. They're not immune to losses — during the 2008 financial crisis, even blue chips like Citigroup collapsed — but they tend to recover faster than weaker companies.

Example: Coca-Cola (KO) has paid and grown its dividend for over 60 consecutive years, earning it the title of 'Dividend King.' An investor who bought $10,000 of KO in 1990 would have over $200,000 today with dividends reinvested.

Many of the stocks tracked in BMInsider's Smart Money Tracker and featured in the Dividend Calendar are blue-chip companies favored by legendary investors like Warren Buffett.