How would I know a blue chip stock if I were to look for one? I have looked at the holding of mutual funds with blue chip in their names and I have my serious doubt that many of the companies in those portfolios are in fact blue chip. Is Amazon for example a blue chip?
Blue chip is an overused term these days. As for mutual funds, many use the term without regard to what their funds actually contain. NO, Amazon is not a blue chip stock. Maybe in 20 years it might be but prior to 5 years ago it did not even make a profit.
I have give some thought to what should be considered a blue chip stock and I did actually find a few. 1. It must pay a dividend and it must raise the dividend at least 5 times out of the previous 10. 2. It must have a conservative capital structure of no more than 33% long term debt to equity. The earning record must be consistent and increasing with no more than 3 down years in the last 10. Its sales must also be increasing.
I have published a list of what I consider blue chips on my blog.
http://munciebirder.blogspot.com/