In the stock market investment time plays a huge role as Warren Buffett has quoted “If you aren’t willing to own a stock for ten years, don’t even think about owning it for ten minutes.” In this article, The NTA® is trying to highlight the top blue-chip stocks which are promising for long-term investment.
Let’s start with the meaning of Blue Chip stocks.
Blue Chip Stocks
Blue-chip stocks are considered high-paying dividend companies that make them valuable. Interestingly, blue chip’s name is derived from the very famous called poker where the most expensive chips are colored blue. With this logic, the stocks which are earning high are considered blue chips.
The stock trader targets these stocks for the long term as the money is earned by various stockholders over the tenure. In India, The Companies mostly have more than 20,000 crores as their market capitalization are considered Blue Chip companies. There are two ways of investing in blue-chip methods, leading as they have survived decades and different economies to safeguard their shareholder’s profits. It is also observed in records that recession also has a minimal impact on the share prices of blue-chip companies.
These are some of the basic features and attraction points of Blue-chip stocks:
- High ROE
- Low Risk
- Low Debt Equity Ratio
- Diversified funds
The blue-chip companies have diversified funding that means the company operations are not dependent on one source.
The top 5 blue-chip companies are the market leaders in their respective sectors.
- Tata Consultancy Service
- Housing Development Finance Corporation
- Asian Paints
- Reliance Industries Ltd.
- Hindustan Unilever Ltd.
The top 5 blue-chip stocks are discussed briefly:
Tata Consultancy Service
It is one of the leading Indian brands of Tata group which provides IT services, consulting, and business solutions globally. The company currently has various operations across the globe. The current financial results also look promising with revenue of $6.154 billion, +2.7%. The company despite COVID Outbreak has improved its operating margin which shows the resilient business model of the company.
Housing Development Finance Corporation
Housing Development Finance Corporation (HDFC) is the largest bank in India and as of June 2021 according to market capitalization, the bank is the third-largest company in the Indian stock market. The company keeps showing growth in net profit as well as profit margin. The company has strong subsidiaries in every vertical of banking whether it is Life Insurance, Educational Loans, Home Loans, Asset Management as well as Real Estate Funding.
[ Also Read: How to earn stocks without a broker? ]
Asian paints are considered the market leader in the domestic paint market as the company owns more than 50% share of the market in India. The company has shown a stable and resilient financial situation with a CAGR of around 9%. The company has a low debt to Equity ratio which helps the organization to healthy financial position. However, the company has faced a slowdown in construction activity due to lockdown and this may affect the revenue in near future.
Reliance Industries Ltd.
Reliance Industries need no introduction as it is the largest company engaged in multiple businesses like Oi Exploration, Petrol Refinement, Telecom, and Retail as well. The company has huge plans in achieving sustainable operations in the coming years. According to the fiscal year 2021, the company is showing an ROE of 8%. The company is also successful in being debt-free by selling some stake of Reliance Retail. The company is growing rapidly with competitive and strategical operations in retail as well as technology.
Hindustan Unilever Ltd.
Hindustan Unilever Ltd. (HUL) is the largest FMCG company in India. The HUL is the brand that has been providing goods across the nation with its strong distribution channel The company shows no outstanding debt and has generated huge turnover recently. The company is also appreciated due to its high dividend payment policy, which is an attractive key point for any investor.
In the end, it is really important to have the right proportion of all the stocks in your portfolio. The blue-chip companies are considered safe to invest but research is required in every type of investment as the market is volatile and can impact any stock in the long run.
NTA®– Keep Learning, Keep investing.