Blue-chip companies are often prized for their stability and are established businesses.
These companies are categorised as such because of their size and long track record of financial performance.
Investors who desire consistency tend to park some money in blue-chips over the long-term, as these companies are expected to provide steady growth and regular dividends.
A simple way to classify a blue-chip company is to review what makes up the key index for each country.
For Singapore, the components of the Straits Times Index (SGX: ^STI), or STI, provides a list of what’s considered blue-chip.
In the US, it would be the Dow Jones Industrial Average (NYSE: ^DJI), or DJIA.
But if blue chips are consistent, then shouldn’t you invest only in this select group of companies?
