What are blue chip stocks and what are their characteristics?

Blue chip stocks are stocks of large companies with better performance, characterized by stable and higher cash dividend payments, and occupying an important and dominant position in the industry to which they belong. The term "blue chip" originates from western casinos, where blue, red and white chips are the most valuable of the three colors. In the stock market, investors call the stocks of large companies that occupy an important and dominant position in the industry to which they belong, have excellent performance, active trading and generous dividends as blue chips. Blue chip stocks are stocks of companies with good management, stable profit-generating ability, and return to shareholders in successive years. These companies have the ability to earn profits in both boom and bust times in the industry, with less risk.

From the experience of various countries, those with large market capitalization, stable performance, leading position in the industry and can play a considerable impact on the securities market where the company - such as Hong Kong's Cheung Kong, Hutchison; the United States of America's IBM; Lloyd's of the United Kingdom, etc., in order to play the role of the "blue-chip stock "reputation. Large market capitalization is blue chip. China's large-cap blue chips also have some, such as: Industrial and Commercial Bank of China, PetroChina, Sinopec.

In the A-share market, blue chips have a stable cash dividend policy (there will be a stable dividend). There are high requirements for the company's cash flow management, usually some listed companies with better business performance. Blue chips are characterized by stable growth, large enterprises, financial or traditional industrial sectors. And, blue chips inside the national institutions and large companies will hold more shares, the stability is relatively good, but also has a greater role in the protection of the market driven.

A, blue chips can be generally divided into four categories:

1, a line of blue chips generally refers to the stable performance, the flow of stock disk and the total share capital is larger, that is, a larger weighting of stocks. Representative stocks are ICBC, PetroChina, Agricultural Bank of China, Guizhou Maotai, Sinopec and so on.

2, the second line of blue chips is relative to the first line of blue chips, in terms of market capitalization, industry status and visibility is slightly inferior to the above referred to the first line of blue chip companies. Representative stocks are Gree Electric Appliances, Midea Electric Appliances, Qingdao Haier, Conch Cement, Yunnan Baiyao, ZTE and so on.

3, high-performing blue chips is the industry has been recognized in the past excellent performance, generous dividends, and maintain stable growth of the company's stock, and high-performance is ranked from the perspective of the performance of the performance of the stock, the best of the best.

4, large-cap blue-chip share capital and market value of large listed companies, stable performance, leading position in the industry on the market trend plays a big role in the individual stocks. Representative stocks are ICBC, Sinopec.