In plain English

The phrase comes from the highest-value chips in poker. Blue-chip companies are household names that have survived many economic cycles and have a track record of paying dividends.

Example

Large consumer, healthcare, industrial and financial companies that have paid dividends for decades are typically described as blue chips.

Why it matters

Blue chips tend to be more stable than small or young companies, which is why income investors often start there.

Common mistakes

  • Assuming “blue chip” means “no risk”. Large companies can still stumble, cut dividends or become overpriced.
  • Treating it as an official category. There is no strict definition.