Blue chip companies are considered to be the most stable stocks to invest.
Such company stocks can give good returns in long term. Do you know why ?
It is because the fundamentals of such companies are strong.See few parameters that let a company to be blue chipped:
Dividend payment history? What does it mean?
A dividend is a payment made by the company to its shareholders, usually as a distribution of profits. When a company earns a profit or surplus, the company is able to re-invest the profit in the business (called retained earnings) and pay a proportion of the profit as a dividend to shareholders.
P/E Ratio. What is it ?
The price-earnings ratio (P/E ratio) is the ratio for valuing a company that measures its current share price relative to its per-share earnings. The price-earnings ratio is also sometimes known as the earnings multiple.
The P/E ratio can be calculated as:
Market Value per Share / Earnings per Share
Return on equity (ROE) is the amount of net income returned as a percentage of shareholders equity. Return on equiy
measures a corporation's profitability by revealing how much profit a
company generates with the money shareholders have invested.
What is 'Return On Equity - ROE' ?
ROE is expressed as a percentage and calculated as:
Return on Equity = Net Income/Shareholder's Equity
Net income is for the full fiscal year (before dividends paid to common stock holders but after dividends to preferred stock.) Shareholder's equity does not include preferred shares.
Top Blue chip companies (as of May 2018) :
What are blue chip companies and a list of companies as of 2018 ? How do they sustain ?
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