Term:BLUE CHIP

A very safe share that has a long history of sound management and steady dividends. Examples of such shares are Sasol, Bidvest, First National Bank, Pick ’n Pay, Standard Bank and Liberty Life. Investors buy these shares for security rather than quick capital gains. There are, perhaps, as many as 60 shares listed on the JSE that could qualify as blue chips. Typically they are part of the JSE Top 40 index, or at least in the mid-cap index. The easiest way for the private investor to make money on the JSE is to find and buy a blue chip when it is for some reason temporarily out-of-favour with the big institutions. For example, for less than a month at the start of 2016, Standard Bank traded on a dividend yield of more than 5%. This was clearly a buying opportunity with relatively little risk for private investors. Consider the chart:

Standard Bank Share Price Chart

Standard Bank April 2016 to April 2018

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