Blue-Chip Stock
Definition
A large, well-established, financially sound company with a long history of reliable performance. Think Apple, Microsoft, Coca-Cola, Procter & Gamble. These are the most stable stocks, typically paying dividends and showing steady growth.
Why It Matters
Blue-chip stocks are the foundation of most diversified portfolios. They're less volatile than growth stocks, often pay dividends, and are least likely to go bankrupt. Good for conservative investors and retirees.
Example
Johnson & Johnson is a blue-chip stock. Less exciting than a hot tech startup, but it's paid increasing dividends for 60+ years. While tech stocks surge and crash, J&J chugs along earning you stable 2-3% dividend yields.