Perpetual Knowledge Bank Series: Blue Chip

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Blue Chip stocks refer to stocks from companies considered to be a high quality and a relatively low-risk investment. The term usually applies to large, well-established companies that have performed well over a long period, have a good reputation and a track record of paying stable or rising dividends.

The term ‘Blue Chip’ is taken from poker, where the blue chips are the most valuable, but is now synonymous with leading companies considered to be leading names in their industry whose products or services usually dominate their respective sectors. This size and stability mean Blue Chip stocks are usually considered less volatile and safe havens for more conservative equities investors. However, like everything in investing, there is risk versus reward component and these stocks may not be the best fit for high-growth investors.

While there is no official list of Blue Chip stocks in Australia, investors will get a good idea of the names involved by noting the S&P/ASX 50 index, a list of Australia's top 50 companies by market capitalisation. These companies are spread across a range of market sectors, including Banking and Financial Services, Resources and the Retail sector.

This information has been prepared by Perpetual Investment Management Limited (PIML) and may contain information contributed by third parties. It is general information and is provided for education purposes only. It is not intended to provide you with financial advice or take into account your objectives, financial situation or needs. You should consider a range of material, and, if you consider necessary, obtain advice from a financial or other adviser, before making investment decisions in relation to your circumstances.

The information is believed to be accurate at the time of compilation and is provided by PIML in good faith. To the extent permitted by law, no liability is accepted for any loss or damage as result of any reliance on this information. PIML does not warrant the accuracy or completeness of any wording in this document which was contributed by a third party.