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Issued by leading brands with advanced profitable standings, these blue-chip stocks are investor-friendly, offering sustained and healthy dividends.
Why blue-chip stocks are beneficial for investors. (Unsplash/Representative Image)
Blue-chip stocks are stocks issued by leading brands and highly profitable companies that have stood the test of time and enjoy a great reputation among investors for offering sustained, healthy returns. These companies have a largely dependable financial standing and usually pay good dividends to their investors.
Typically, the market capitalisation of such companies runs in billions, establishing themselves as the leader of the market concerned or at least one of the top five companies within its sector in the country. Because of the stability and returns offered on investment in these companies, blue-chip stocks are usually among the most popular stock purchases for investors.
Thanks to their reliable financial returns, blue-chip stocks can be smart additions to a portfolio. Many investors invest their money in such stocks as they offer dependable, longstanding and rising dividends. Investors trust these stocks to outlast downward turns and other challenges posed by the market. While that could be true, it is not a guarantee. Hence, investors are advised to diversify their portfolios.
It is also important to keep in mind that dividend payments are not necessary for a stock to be considered a blue chip. However, records of such stocks offering stable and growing returns every quarter are certainly there.
Other Features
Creditworthiness: Since blue-chip companies have enough capital to clear their financial dues and obligations easily, their shares are considered significantly safe and come with great creditworthiness.
Risk: The risk factor associated with investing in blue-chip stocks is comparatively less due to the strong and stable performance of the companies and shares in the financial market. However, it is advised that investors should diversify their portfolios and not put all their bets in one basket to guard against potential fallout.
Investment Duration: Blue-chip stocks come with an investment duration of over seven years. An extended investment horizon helps investors avoid anxiety and achieve their financial goals.
Taxation: As gains extracted through blue-chip stocks are treated as income under Section 80C of the Income Tax Act, investors get tax benefits on their capital gains. Short-term capital gains are taxed at the ordinary income tax rate, while long-term capital gains exceeding Rs 1 Lakh are subject to taxation at the rate of 10 per cent.
A team of writers at News18.com bring you stories on what’s creating the buzz on the Internet while exploring science, cricket, tech, gender, Bollywood, and culture.
A team of writers at News18.com bring you stories on what’s creating the buzz on the Internet while exploring science, cricket, tech, gender, Bollywood, and culture.
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Delhi, India, India
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