Blue Chip Stock

A blue chip stock is a share of a large, well-established, financially stable company. These are household names with long operating histories, consistent earnings, and usually a track record of paying dividends. The term originally comes from poker, where the blue chip has the highest value.

Canadian examples

In Canada, blue chips include the big banks (Royal Bank, TD, BMO), telecoms (Bell, Telus, Rogers), railways (CN Rail, CP Kansas City), and energy giants (Enbridge, TC Energy). In the U.S., you’d see names like Apple, Microsoft, Johnson & Johnson, and Coca-Cola.

These companies aren’t guaranteed to go up, but they tend to be more stable than smaller or newer companies. They’ve survived recessions, market crashes, and industry shifts. That track record is part of what earns the blue chip label.

Why investors like them

Blue chips are often the backbone of a long-term portfolio. They tend to pay dividends, which gives you income while you hold them. They’re also widely followed by analysts, so there’s plenty of information available to help you evaluate them.

That said, “blue chip” doesn’t mean “risk-free.” Large companies can still lose value. Nortel was once considered a Canadian blue chip, and it went to zero. BlackBerry was a dominant force before smartphones reshaped the market.

Blue chips are generally lower risk compared to smaller, less proven companies. But no stock is immune to change. The label reflects a company’s current standing, not a permanent guarantee.

Example

Royal Bank of Canada (RY) is a classic Canadian blue chip. As of early 2026, it trades around $170 per share and pays a quarterly dividend of roughly $1.58 per share, which works out to about a 3.7% annual yield. If you held 100 shares, you’d collect around $632 per year in dividends. Royal Bank has paid dividends without interruption since 1870. That kind of consistency is what separates blue chips from the rest of the market.