Blue chip stocks are stocks of well-established, financially stable companies that have a strong track record of consistent growth and profitability. These companies are typically large, with market capitalizations of more than $10 billion. They are often household names and are considered to be the leaders in their respective industries. Examples of blue chip stocks include companies like Apple, Microsoft, Amazon, and Coca-Cola.
Blue chip stocks are often considered to be the safest stocks to invest in, as they are less risky than small cap or mid cap stocks. They tend to be more stable and less volatile, and they typically pay dividends to shareholders. They also tend to have a lower beta, which is a measure of a stock’s volatility in relation to the market.
Blue chip stocks are considered to be a good long-term investment, as they have a strong track record of consistent growth and profitability, providing a steady stream of dividends and capital appreciation. They can provide stability to the portfolio, but they also tend to have lower returns than the smaller cap stocks.
What Are Blue Chip Stocks?
“A Blue Chip stock is the stock of a large, well-established and financially sound company that has operated for many years”
Usually, Blue Chip Stocks have a market capitalization usually in the billions; are generally the market/sector leaders or among the top three companies in its sector, and are more often than not a household name.
Blue Chip stocks, also known as large-cap stocks (because the companies have a high market capitalization of $1 billion or more), tend to rise and fall in conjunction with the stock market in general. Examples of Blue Chip stocks include Coca-Cola, Disney, Intel, and IBM. The term “Blue Chip Stock” comes from the card game, Poker, where the highest and most valuable playing chip colour is blue.
What Are Blue Chip Companies?
The market cap of the Blue chip companies is usually over 500 million at least. I mean to say with the same amount invested over the years your dividends tend to increase because of the dividends percent raise from these companies.
The Blue Chip Stocks that I’m about to recommend have a history of earnings and, in most cases, a history of sustainable dividends. They have established their value over the long term. Like all stocks, they can fluctuate widely and many suffer in a long-term market downturn, but they offer a higher probability of long-term gains
Every portfolio should contain at least a couple of Blue Chip stocks for stability and for the long term portfolio growth. Anyone with common sense would want a stake in businesses they not only understand but that have a demonstrated record of extreme profitability over generations, and blue chips stocks certainly fit the description.
Another reason Blue Chip stocks are popular is that they offer somewhat of a relatively safe harbor during economic catastrophes (especially if coupled with gilt-edged bonds and cash reserves).
In-experienced and poorer investors don’t think about this too much because they’re almost always trying to get rich too quickly, shooting for the moon, looking for that one thing that will instantly make them rich. It hardly ever ends well. Markets will collapse. You will see your holdings drop by substantial amounts no matter what you own
Blue Chip stocks often represent companies residing at the core of Canadian and global business; firms boasting pasts every bit as colorful as any novel and interwoven with politics and history. Their products and services permeate nearly every aspect of our lives.
What Are Small Cap and Mid-Cap Stocks?
Small cap stocks and mid cap stocks are two types of stocks that are defined by the market capitalization (market cap) of the company.
Small cap stocks are stocks of small companies, typically defined as those with a market capitalization of less than $2 billion. These companies tend to be less well-established, with less predictable revenue and earnings, and they may be more risky than larger, more established companies. However, they also have the potential for higher returns if the company is successful.
Mid cap stocks are stocks of medium-sized companies, typically defined as those with a market capitalization between $2 billion and $10 billion. These companies are typically more established than small cap companies, with more predictable revenue and earnings. They may be seen as less risky than small cap stocks, but still offer higher returns than large cap stocks.
It’s worth noting that the definition of small cap and mid cap can vary depending on the source and can change over time as the market evolves.
Both small cap and mid cap stocks tend to be more volatile than large cap stocks and therefore may not be suitable for all investors. They can provide diversification to the portfolio and can provide higher returns in the long run, but they also carry a higher risk.
History Of Blue Chip Stocks
Do you know the history of Blue Chip stocks?
The phrase was invented by Oliver Gingold of Dow Jones in the year 1923.
Gingold was standing by the stock ticker at the brokerage firm that later became Merrill Lynch.
Noticing several trades at $200 or $250 a share or more, he said to Lucien Hooper of W.E. Hutton & Co. that he intended to return to the office to “write about these Blue Chip stocks.”
The phrase has been in use ever since, originally in reference to high-priced and high-quality stocks.
Top 30 Canadian Blue Chip Stocks
Alright then, let’s jump straight into the list now.
In order to determine the 30 Best Canadian Blue Chip Stocks in the market – I’ve considered the following parameters to help you better analyze the worthiness of each pick:
-
Stock Name
-
TSX Symbol Name
-
Valuation
-
Dividend
Again under Valuation and Dividend Columns – we have the metrics underneath such as the Price/Earnings ratio, Dividend Growth Percentage, Cash Flow, Annual Dividend Yield, Book Value of the stock etc. These important metrics for every stock on this list should give you a clear representation of which ones to pick.
Measured across long periods, Blue Chip stocks have minted money for owners prudent enough to hang on to them with tenacity through thick and thin, good times and bad times, war and peace, inflation and deflation. In addition, I’ve also split the Blue Chip Stocks into 10 Industry Sectors to better Identify and ease of understanding better.
1. Finance Stocks
|
Bank of Nova Scotia (TSE: BNS) Valuation Price/Earning: 12.4x |
Dividend 5 Year Dividend growth: 6.77% |
|
Toronto Dominion Bank (TSE: TD) Valuation Price/Earning: 13.1x |
Dividend 5 Year Dividend growth: 10.39% |
|
Royal Bank Of Canada (TSE:RY) Valuation Price/Earning: 12.0x |
Dividend 5 Year Dividend growth: 9.02% |
Blue Chip stocks offer you both capital gains growth potential and regular dividend income.
The dividend yield is certainly one of the most concrete indicators of a sound investment. It is the percentage you get when you divide the current yearly dividend payment by the share or unit price of the investment
|
National Bank of Canada (TSE: NA) Valuation Price/Earning: 13.2 |
Dividend 5 Year Dividend growth: 10.47% |
|
Canadian Imperial Bank of Commerce (CIBC) (TSE: CM) Valuation Price/Earning: 9.7x |
Dividend 5 Year Dividend growth: 4.32% |
After all, who remembers Coca-Cola losing around 50% of its value due to the sugar crisis shortly after its IPO? A single share bought for $40, which crashed down to $19, is now worth more than $15,000,000 with dividends reinvested.
|
Sun Life Financials Inc (TSE: SLF) Valuation Price/Earning: 13.1x |
Dividend 5 Year Dividend growth: 0.95% |
|
Brookfield Asset Management Inc (TSE:BAM.A) Valuation Price/Earning: 27.3x |
Dividend 5 Year Dividend growth: 6.43% |
|
Intact Financial Corporation (TSE: IFC) Valuation Price/Earning: 18.2x |
Dividend 5 Year Dividend growth: 9.28% |
2. Real Estate – REIT Stock’s
|
RioCan Real Estate Investment Trust (TSE: REI.UN) Valuation Price/AFFO: 17.02x |
Dividend 5 year Dividend growth: 0.43% |
|
Canadian Apartment Properties Real Estate Investment Trust (TSX: CAR.UN) Valuation Price/AFFO: 17.57x |
Dividend 5 year Dividend growth: 2.19% |
|
Boardwalk REIT (TSE: BEI.UN) Valuation Price/AFFO: 16.18x |
Dividend 5 year Dividend growth: 2.53% |
3. Energy Stocks
|
Enbridge (TSE: ENB) Valuation Price/Cash flow: 16.7x |
Dividend 5 year Dividend growth: 11.85% |
|
TransCanada Corporation (TSE: TRP) Valuation Price/DCF: 12.23x |
Dividend 5 year Dividend growth: 5.39% |
|
Suncor Energy Inc (TSE: SU) Valuation Price/Earning: – (negative value) |
Dividend 5 year Dividend growth: 23.30% |
|
Imperial Oil Limited (TSE: IMO) Valuation Price/Earning: 122.5x |
Dividend 5 year Dividend growth: 4.63% |
4. Telecommunication Stocks
|
BCE Inc (TSE: BCE) Valuation |
Dividend 5 year Dividend growth: 7.81% |
|
Rogers Communication Inc (TSE: RCI.B) Valuation Price/Earning: 20.0x |
Dividend 5 year Dividend growth: 8.45% |
|
Telus Corporation (TSE: T) Valuation Price/Earning: 18.0x |
Dividend 5 year Dividend growth: 10.93% |
5. Utility Stocks
|
Fortis Inc (TSE: FTS) Valuation Price/Earning: 21.1x |
Dividend 5 year Dividend growth: 4.49% |
|
Canadian Utilities (TSE: CU) Valuation Price/Earning: 26.6x |
Dividend 5 year Dividend growth: 9.34% |
|
Emera Inc (TSX: EMA) Valuation Price/Earning: 14.4x |
Dividend 5 year Dividend growth: 7.42% |
|
Brookfield Renewable Energy Partners LP (TSE: BEP.UN) Valuation Price/FFO: 22.07x |
Dividend 5 year Dividend growth: 5.78% |
|
Algonquin Power & Utilities Corp (TSE: AQN) Valuation Price/AFFO: 10.01x
|
Dividend 5 year Dividend growth: 15.16% |
|
Dollarama Inc. (TSE: DOL) Valuation Price/Earning: 24.78
|
Dividend 5 Year Dividend Growth: – |
6. Material Stocks
|
Agrium Inc (TSE: AGU) Valuation Price/Earning: 14.3x |
Dividend 5 year Dividend growth: 83.20% |
7. Information Technology (IT) Stocks
|
CGI Group Inc (TSE:GIB.A) Valuation Price/Earning: 18.8x |
Dividend 5 Year Dividend growth: 0% |
|
Constellation Software Inc (TSE: CSU) Valuation Price/Earning: 55.99
|
Dividend 5 Year Dividend Growth: |
8. Consumer Stocks
|
Saputo Inc (TSE: SAP) Valuation Price/Earning: 29.0x |
Dividend 5 year Dividend growth: 11.35% |
|
Loblaw Companies Limited (TSE: L) Valuation Price/Earning: 41.7x |
Dividend 5 year Dividend growth: 3.44% |
|
Metro Inc (TSX: MRU) Valuation Price/Earning: 18.0x |
Dividend 5 year Dividend growth: 15.83% |
9. Consumer Discretionary Stocks
|
Canadian Tire Corporation Limited (TSE: CTC) Valuation Price/Earning: 14.6x |
Dividend 5 year Dividend growth: 20.11% |
|
Magna Internations Inc (TSE: MG) Valuation Price/Earning: 8.5x |
Dividend 5 year Dividend growth: 29.71% |
|
Cineplex Inc (TSX: CGX) Valuation Price/Earning: 25.3x |
Dividend 5 year Dividend growth: 4.10% |
|
Thomson Reuters Corporation (TSE: TRI) Valuation Price/Earning: 26.0x |
Dividend 5 year Dividend growth: 2.93% |
10. Infrastructure and Transportation Stocks
|
Canadian National Railway Company (TSE: CNR) Valuation Price/Earning: 19.2x |
Dividend 5 year Dividend growth: 18.28% |
|
Brookfield Infrastructure Partners L.P (TSE: BIP.UN) Valuation Price/FFO: 14.25x |
Dividend 5 year Dividend growth: 14.02% |
|
Exco Technologies Limited (TSE: XTC) Valuation Opportunity Score: 89% |
|
|
SU – SmallSuncor Opportunity Score: 86% |
|
|
MRU – Metro Inc. Opportunity Score: 85% CP – SmallCanadian Pacific Opportunity Score: 85% ATCO – ATCO Group Opportunity Score: 83% CU – Canadian Utilities Limited Opportunity Score: 81% BMO – Bank Of Montreal Opportunity Score: 80% FN – First National Opportunity Score: 80% SAP – Saputo Opportunity Score: 80% |
|
|
(TSE: AC) Valuation Price/Earning: 11.50
|
Dividend 5 Year Dividend Growth: NA |
Blue Chip Stocks vs. Growth Stocks
Blue chips are growth stocks as well, then what’s the difference? Let’s see that in this section.
As we have already detailed before – Blue chip stock refers to the stock of a company that is well established, publicly traded and with a historical record of generating profit for its stockholders.
In plain English, when you ask, “what are Blue chip stocks?” the answer is usually shared in a company you already know. Companies that have stood the test of time and pose less risk to an investor even in the worst financial crises are Blue chip stock companies. Coca-Cola and Apple are two good examples.
Blue Chip stocks are also the best dividend stocks; your best promise of investment quality—and of strong returns for years to come
Also, Blue chip companies have a reputation for operating in a safe, profitable and reliable manner, are often leaders in their industry and have typically been in operation for 25 years or more.
What Are Growth Stocks Then?
Growth stocks are generated from new-to-the-market[newbie] companies showing recent earnings growth and expected to gain profit quickly in a particular sector.
Growth stock companies often conduct development and research in a field of interest, such as technology or medicine, and may be considered pioneers in a particular industry. Because these companies are newly traded, they lack a track record of reliable operation (Blue Chip companies edge here).
Instead of reliability, a growth stock is purchased because of the possible higher profits they could generate once the company succeeds.
Are Blue Chip Stocks Safe?
The majority of investors know blue-chip stocks have stable earnings. During an economic downturn, investors may turn to these safe havens because of their secure nature.
Blue Chip companies offer security during periods of slower growth due to their intelligent management teams and the ability to generate stable profits.
If the stock market is experiencing a bear market, investors don’t need to worry about their investments in blue-chips because, generally, they recover.
Blue Chip stocks are considered a good investment for persons wanting to build wealth in a steady, conservative manner. Because Blue Chip companies are often quite large and very popular with investors, the price of their stock is generally much higher than a growth stock making them less affordable.
Top 10 Canadian Blue Chip Stocks of All Time – 2021
Here’s the list of the Top 10 All-Time Favourite Canadian Blue-Chip Stocks you should have as part of your investment portfolios. Again just to re-iterate, even having a couple of these blue chips will be good. All of these stocks have delivered consistently over a longer period of time, withstanding the great recession periods and blue chips for a reason.
You may want to at least have a couple of these stocks, be it you are an aggressive, dividend-only investor or the average Joe kind of an investor. The longer the periods of investment, the better the results. That’s the mantra be blue-chip stocks. The same rule is applicable to any good investment elsewhere too.
1. Royal Bank of Canada – TSE: RY, NYSE: RYRBC – Royal Bank of Canada Opportunity Score: 63% 2. Toronto-Dominion Bank – TSE: TD, NYSE: TDTD – TD Bank Toronto-Dominion Bank Opportunity Score: 61% 3. Bank Of Nova Scotia – TSE: BNS, NYSE: BNSBNS – Scotia Bank Opportunity Score: 61% 4. Canadian National Railway – TSE: CNR, NYSE: CNICNR – Canadian National Railway Opportunity Score: 58% 5. Suncor – TSE: SU, NYSE: SUSU – Suncor Opportunity Score: 42% 6. Bank Of Montreal – TSE: BMO, NYSE: BMOBMO – Bank of Montreal Opportunity Score: 54% 7. Bell Canada – TSE: BCE, NYSE: BCEBCE – Bell Canada Opportunity Score: 51% 8. Enbridge – TSE: ENB, NYSE: ENBOpportunity Score: 50% 9. TransCanada Pipeline – TSE: TRP, NYSE: TRPTRP – TransCanada Pipeline Opportunity Score: 21% 10. Canadian Natural Resources – TSE: CNQ, NYSE: CNQCNQ – Canadian Natural Resources Opportunity Score: 30% |
Final Words
Blue Chip stocks come from companies whose stocks have a national reputation for quality, reliability, and the ability to operate profitably in good times and bad.
With that said, owning a couple of blue chips in your portfolio is definitely worth your time and money.
If you ask me which ones to choose, I will leave that option for you. Choosing the best stocks always depends on your Investment type, risk, age factor, and personal finance choice. But there’s one thing I can assure you of – the earlier you start investing, the better you are. Your investments will grow that much faster and over a period of time with compounded growth – you see magical numbers. I’ve seen that in a couple of my good investments.
With that said – There are passive, mediocre and aggressive investors in the market. One thing for sure – By far blue chips are market-tested time and again and are the safest investments for all three types of investors.
Whether we’re talking about socks or stocks, I like buying quality merchandise, when it is marked down – Warren Buffett
If you liked the content of this article, please share it on social media and help spread the word. Also, do let me know your thoughts and comments below.
Top 10 Popular Posts Of All Time
- How To Use A My Service Canada Account
- How To Watch Free TV Shows In Canada – List of 10 Best Sites
- 10 Costco Membership Benefits You Need To Know Today
- Top 7 Canadian ETFs You Should Own In 2020
- Retirement Benefits & Old Age Security Pension (OAS) In Canada
- 7 Quick Ways To Maximize Your PC Optimum Points
- WestJet Rewards Review – Everything You Need To Know
- How To Get An Emergency Canadian Passport – Complete Guide
- How To Open A CRA My Account In 2020?
- VGRO Review – Vanguard’s Best Growth ETF In 2020
Sagar Sridhar is an accomplished personal finance blogger hailing from Canada. With a unique blend of quirkiness and enthusiasm, he has established himself as a prominent figure in the personal finance industry. Sagar’s passion for finance, coupled with his engaging writing style, sets him apart from his peers. While he has a background in computer engineering and a Master’s in Project Management, Sagar’s true passion lies in helping others manage their money. His writing has been featured in several top Canadian finance publications, solidifying his status as a sought-after voice in the field. Despite juggling his work and blogging schedule, Sagar remains resolute in his mission to make a lasting impact on the personal finance world.
