What Is a Blue Chip Stock?

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Blue Chip Stocks are Stocks of a well-established and financially sound company that has demonstrated its ability to pay dividends in both good and bad times.

These stocks are usually less risky and more reliable than other stocks.

A "blue chip" is the nickname for a stock that is thought to be safe, in excellent financial shape and firmly entrenched as a leader in its field. Blue chips generally pay dividends and are favorably regarded by investors. A few examples of blue chips are Wal-Mart, Coca-Cola, Gillette, Berkshire Hathaway and Exxon-Mobile.

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