• All
    Trading
    Platforms
    Academy
    Analysis
    About
  • Search
Keyworks
  • Trading Accounts
  • TradingView
  • Trading Fees
  • facebook
  • instagram
  • twitter
  • linkedin
  • youtube
  • telegram
What are Blue-chip Stocks in Australia: A Complete Guide

TABLE OF CONTENTS

What are Blue-chip Stocks in Australia: A Complete Guide

What are Blue-chip Stocks in Australia: A Complete Guide

Vantage Updated Updated Mon, November 20 02:04

You may have heard of the term “blue-chip stocks” or “blue-chip” stocks, but what qualifies as ‘blue-chip’ and are they available in Australia? Let’s take a brief look at some of the most frequently asked questions.

The first thing to note is that blue-chip companies are often big-name companies that are known by the man on the street. This means that you may recognise these companies but haven’t discovered what that term means for investing and the overall market performance of those stocks.

Section 1: What are blue-chip stocks in Australia?

Much like other stock markets, Australia has quite a handful of stocks that are held in that special regard.

These are companies with a history of providing payable dividends to their shareholders. Its steady performance and reliability are the reasons a company is given the value of being ‘blue-chip’. 
The term is related to the highest-valued chips in poker – those being in the colour blue.

That reference has been inherited from the most dependable stocks in Australia. 

You will find a wide range of blue-chip stocks offered on the Australian Securities Exchange (ASX). The selection includes a variety of industries such as mining, telecommunications, banking and financial services, health and pharmaceuticals.

Blue chip stocks are known to provide those investors with a reliable stream of returns.

Section 2: How many blue-chip stocks are there in Australia?

There is no standard or official definition of what constitutes a stock being ‘blue-chip’. Suffice it to say that only a stock that has a long and reliable history of performing well, providing dividends on a regular basis and is both well-managed and regulated has the ability to be categorised with the blue-chip label.

Section 3: What to Look for in Blue-chip Shares

australian blue chip shares

There are no hard and fast rules to determine which shares become blue-chip. However, most blue-chip companies have some common characteristics. What are they? Here are some traits to help you identify them: 

  • Strong share performance: The share price has increased consistently over a long period. 
  • Robust financial .strength: These shares have an excellent credit rating, low or modest debt, and plenty of liquidity (cash) 
  • Excellent Management: Companies are under tenured executives with successful track records 
  • Large market capitalisation: These companies are the largest in their respective industries 
  • Great business models and economics: These companies have innovative business models and generate massive cashflows 
  • Growth potential: These companies have rapid growth and promising future projections. 

Always remember that some blue-chip companies may lack one or two of these traits. Moreover, none of these stocks is immune to market forces. Adverse market events like recessions can affect their performance.  

Blue chip stocks in Australia include the Commonwealth Bank, ANZ, Westpac and the NAB from the banking and finance sector. BHP, The Fortescue Metals Group and Rio Tinto are the leaders in the mining and energy sector. 

You will also find the biotech giant, CSL and the Australian conglomerate of Wesfarmers with high-profile subsidiaries in Bunnings, Target, Kmart and Officeworks.

Section 4: Why You Should Trade Blue-chip Stocks

If you’re just starting as a trader, here are some reasons to consider blue-chip stocks: 

Low risk 

Blue-chip stocks are lower risk and less volatile than other stocks. That makes them potential safe-haven assets for your capital, especially if you’re new to trading. 

Well-regulated 

Blue-chip companies are under the management of experienced executives with outstanding reputations. That ensures these companies continue to grow and perform well in the markets. 

Dividends 

Many blue-chip stocks pay dividends consistently, and that contributes to a more balanced trader’s portfolio.

Section 5: Considerations and Risks

There are a number of special considerations and inherent risks in trading, even when it comes to blue-chip stocks. 

These include issues such as:

  • Market volatility and price fluctuations
  • The impact of economic factors on blue-chip stocks
  • The importance of diversification and risk management strategies

High market volatility also creates an environment of increased uncertainty. This can make for a challenging time for investors who want to better predict the future and make informed investment decisions. There can be various factors involved in this uncertainty such as changing economic conditions, changes to government policy, geopolitical events, or unforeseen issues or news relating to specific companies.

There are several economic factors that significantly impact blue chip stocks. These factors can be anything from any changes to interest rates or inflation, global economic issues, government policies and regulations as well as consumer sentiment and the willingness to spend.

It is vital that anyone thinking of investing considers the overall economic environment and each company when evaluating blue chip stocks.

There are always important strategies that you can put in place before investing, such as risk management and diversifying your investments.

You can find more on diversifying your portfolio and risk management strategies in this Guide to Portfolio Diversification.

Final Thoughts 

Here’s a quick recap of blue-chip stocks. They are amongst the most valuable stocks in the markets, with massive market caps and industry dominance. In Australia, you’ll find the best blue-chip stocks on the S&P/ ASX 20. These companies are fairly easy to analyse, and you may consider them as part of your portfolio.  

When it comes to CFD stock trading including CFD US stocks, you need a trusted team of CFD stock brokers.

Contracts-for-Difference (CFDs) allow you to speculate on the price movements of an asset without actually owning it.

Ready to get started? Start trading blue-chip stocks via CFDs with Vantage today where you can enjoy commissions as low as $6 per side.

Disclaimer: The material provided here has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Whilst it is not subject to any prohibition on dealing ahead of the dissemination of investment research we will not seek to take any advantage before providing it to our client. No representation or warranty is given as to the accuracy or completeness of this information and therefore it shouldn’t be relied upon as such. Any research provided does not have regard to specific financial situations, needs or investment objectives. Vantage accepts no responsibility for any use that may be made of these comments and for any consequences that result. Consequently, any person acting on it does so entirely at their own risk. We advise any readers of this material to seek professional advice where necessary. Without the approval of Vantage, reproduction or redistribution of this information isn’t permitted.

  • vantage academy open account

    Open Trading Account

    Discover the endless trading possibilities with our cutting-edge platform, designed to empower our traders. Practice trading the markets with a free demo account today.

  • vantage academy app

    Download Vantage App

    Trade on the go with the Vantage All-In-One Trading App, where smooth execution and market access come together in the palm of your hand.

  • vantage academy start trading

    Start Trading

    Are you an existing user? Login to your account to start trading 1,000+ CFD products including forex, indices, gold, shares and more.