Working on the securities market is a rather risky and complex activity. Therefore, for those who make their first steps in the market, it is very important not to make a mistake. The negative experience that is associated with the loss of invested funds, often for a long time, if not forever, discourages the desire to invest. Therefore, starting work in the market, traders should invest in the least risky securities.
- What are blue chips in the stock market
- What are the requirements for companies to be eligible for blue chip status?
- What determines the volume of purchase and sale of shares in the stock market
- Capitalization (value) of the company.
- Volume of securities in circulation (free-float)
- Benefits of blue chip stocks over other stocks
- High level of liquidity of “blue chips”
- High resilience of companies
- High dividends
- Companies that have the status of “blue chips” in various securities markets
- On the Russian stock market
- Blue chips in the US stock market
- On other stock markets
- How to buy blue chip shares for a domestic investor
- Blue chips are the best choice for initial investment
What are blue chips in the stock market
Blue chips – the name itself comes from the chips of the largest value, which were played in casinos in the last century. These chips were usually operated by the richest players at the table. And gradually, from the gaming slang, this concept moved from the gaming table to the investment market.
Blue chips are shares of the largest financially sound companies with high liquidity of assets, which are most sold and bought on the market. As a rule, the payment of dividends on the shares of such companies remains almost unchanged, and the owners of the shares can receive a stable, albeit small, income for several decades. Only the global crisis, war or other circumstances of equal strength can affect the value of such shares. As an example for the Russian Federation, the daily turnover of Gazprom or SbeBank shares in the market amounts to tens of billions, and they can rightfully be called “blue chips”.
After all, the volume of trade even among the closest competitors is an order of magnitude smaller. Real-time quotes on the blue chip market are available at https://investfunds.ru/stocks/ 
What are the requirements for companies to be eligible for blue chip status?
In order for a company’s shares to be eligible for blue chip status, the company must meet the following requirements:
- her shares were popular in the stock market, and she received a steadily growing income for a number of years;
- had a high level of capitalization;
- its shares must be highly liquid;
- the value of the company’s shares should not undergo major changes over time (low volatility);
- the company must be represented on the stock market for a sufficiently long period;
- payments of dividends on shares by the company must be made regularly without failures;
- for at least 10 years, the company must not fall into situations of internal crisis that can significantly affect the value of its shares.
What determines the volume of purchase and sale of shares in the stock market
The volume of purchase and sale of shares in the stock markets depends on two main parameters:
Capitalization (value) of the company.
The higher the capitalization of the company, the greater the number of its shares are sold and bought daily. According to the level of capitalization, companies in Russia can be divided into echelons:
- The first echelon includes companies that can have a capitalization level measured in trillions of rubles.
- The second tier consists of companies whose capitalization can be several hundred billion.
- And the third tier is relatively small companies, the value of which does not exceed several tens of billions of rubles.
Information on the capitalization of various enterprises can be obtained from the Moscow Exchange. 
Volume of securities in circulation (free-float)
The greater the volume of company shares in circulation, the higher the free-float rate. So, for example, the shares of a large developer, the PIK construction company, are not blue chips. Despite the high level of capitalization (about 870 billion rubles), the share of its shares on the stock market is only 18% of their total number. For comparison, Magnit (capitalization of 637 billion rubles), and the share of shares in the stock market, is about 63% of the total. 
Benefits of blue chip stocks over other stocks
The main advantages of shares with the status of “blue chips” over other securities on the stock exchange can be attributed.
High level of liquidity of “blue chips”
The high level of liquidity of securities makes it possible to sell them more profitably, and sales volumes can be practically any. A lot of traders are engaged in the purchase and sale of “blue chips”, so any operations with these assets are carried out very quickly. At the same time, the higher the liquidity of shares, the closer to their market prices they can be bought or sold.
High resilience of companies
Companies included in the blue chip list are leaders in their industries and have significant advantages when competing with other market players. In our country, often these are state-owned companies or companies with a significant share of the state. capital that is considered strategic. These can rightly include such companies as Gazprom, Rosneft, Sberbank, etc. Such companies are the largest payers to the budget, and can always count on state assistance in case of a crisis. Such companies tend to operate in established markets. The appearance of any significant competitors is unlikely. Since the creation of new companies in these areas requires a truly colossal investment. These factors make the performance of blue chips much more stable than the performance of smaller players in the market. They have a much higher margin of financial stability and, accordingly, their credit rating is very high, and this allows them to attract credit resources at lower interest rates. 
High dividends
The established business model in large companies allows them to pay fairly high and regular dividends. In accordance with the current legislation of the Russian Federation, state. companies must use at least 50% of their profits to pay dividends on shares. At the same time, companies classified as “blue chips” of the Russian Federation are mainly classified as “raw materials”, which ensures a fairly high level of profit, and, accordingly, dividends. This is unusual for most small companies – recent startups. They often do not pay dividends or pay them in minimal amounts. Such companies are interested in rapid capitalization and accelerated development, so they try to invest the profits in their growth and promotion in the market. It is important for these companies to take additional market shares. [caption id=”
Companies that have the status of “blue chips” in various securities markets
In various stock markets, companies whose shares have the status of “blue chips” are determined by:
On the Russian stock market
In the Russian Federation, companies acquire blue chip status based on an index calculated by the Moscow Stock Exchange. Today, this list includes the fifteen largest companies in the country, namely:
- Gazprom
- Sberbank
- Rosneft
- Lukoil
- “Yandex”
- Norilsk Nickel
- “Magnet”
- “MTS”
- NLMK
- Novatek
- “Pole”
- “Polymetal”
- Surgutneftegaz
- “Tatneft”
- TCS Group
Quotes for blue chips of the Russian Federation, the USA on the securities market in real time can be viewed at https://www.finam.ru/quotes/
Blue chips in the US stock market
In the US, the list of companies whose shares are “blue chips” is established on the basis of the Dow Jones index. To calculate this indicator, data on the financial position of the 30 largest companies are used. Most of them operate in the banking sector, in the sector of large high-tech production, as well as companies that specialize in retail chains. In such companies, the level of capitalization is maximum, and the level of liquidity is very high. The list of such companies includes the flagships of the business, such as:
- Coca Cola
- Boeing;
- Nike;
- walmart
- Walt Disney and others.
All US stock market blue chips that pay dividends are American aristocrats at https://www.proshares.com/funds/nobl_daily_holdings.html: [caption id="attachment_3453" align="aligncenter" width="982"]
Blue US stock market chips [/ caption] However, in the US, the list of companies whose shares are classified as “blue chips” is not limited to those identified by the Dow Johnson index. These include companies that increase the size of their dividends on shares for at least 20 years. Such companies are called “dividend aristocrats” and are defined in accordance with the S&P 500 Dividend Aristocrats index. [caption id="attachment_3441" align="aligncenter" width="756"]
On other stock markets
The EU countries have their own index for identifying “blue chips” EURO STOXX 50. Based on it, the list of companies included in this club in the EU countries includes such giants as:
- Volkswagen;
- Siemens;
- Telefonica and many others.
The UK uses its FTSE 100 index, and the leaders of the English list of blue chips are Vodafone, Tobacco, Burberry. Japan and the countries of Southeast Asia have their own indices and, accordingly, their own “blue chips”. Stock prices on stock exchanges can be viewed online at https://investfunds.ru/stocks/
How to buy blue chip shares for a domestic investor
There are several ways that investors can purchase blue-chip shares, namely:
- Buy a part of a ready-made ETF investment portfolio . This portfolio is formed from various assets, and its parts are freely sold and bought on the stock market. Therefore, an investor is free to buy on the stock exchange part of the portfolio, which includes shares of “blue chips”.
- Assemble a portfolio of investments on your own , but this method is quite capital-intensive. In addition, this method requires a lot of time, you will need to open your own brokerage account, install specialized programs on your PC and make purchases in accordance with the Profit index.
- It is also possible to open a brokerage account abroad , which immediately gives the investor the opportunity to purchase directly the “blue chips” of the country in which the account is located. But this method requires very significant capital investments, since the value of such shares is quite high (at the end of October, the cost of a Tesla share was $ 909), and is available to wealthy investors.
The structure and profitability of the Russian blue chip index as of 2021 according to MOEX:
Blue chips are the best choice for initial investment
Investing in blue chips allows you to practically not react to significant market fluctuations, and a stable exchange rate allows you to use them as safe long-term investments. And it is clear that “blue chips” are much less risky in comparison with other stocks. All data on the status of blue chips can be obtained online at https://investfunds.ru/stocks/?auto=1
