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  Friday November 24, 2017

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WHAT ARE THE RISKS?
Learn even more about this topic with the Encyclopedia of Personal Finance™

Investors in blue chip stocks seek conservative growth rates and a safe investment.  The consistent revenues and earnings of blue chips attract long-term investors.  They don't grow in value as quickly as small-cap stocks, such as new technology companies, but they pay dividends on a regular, predictable basis.  The price per share of blue chip stocks tends to be very high.  As a result, the dividend yields (the annual dividends per share divided by the stock prices) of blue chip companies tend to be lower than those of small-cap companies.

The historical strength and financial stability of blue chip companies give blue chip shares low market price risk.  This is the risk that share prices will fluctuate.  Because blue chips are covered so often by the financial media, there are few surprises when blue chip stock prices do change.  The relatively low price risk of blue chip shares means their returns aren't generally as high as other, more volatile stocks.

The performance of a blue chip company is often an indicator of how well the entire stock market will perform.

Where can you find performance information on blue chip stocks? You'll find out in the next tutorial section.




LEARN EVEN MORE WITH THE ENCYCLOPEDIA OF PERSONAL FINANCE. CLICK HERE!

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