Last updated on June 3rd, 2020 at 07:32 pm
In this article, let’s take a look at the Top 30 Canadian Blue Chip stocks you should own in 2020. In case you don’t know – Blue Chip Stocks are evergreen, payout good dividends every year (increasing dividends in fact because the businesses do better over the years), stable stocks irrespective of market crashes (volatility will be less) and good for the overall portfolio be it your TFSAs or RRSPs. Please also note that in this post, we’ll only consider the Canadian Stocks actively trading in the TSX market and not the US stocks (NASDAQ, NYSE..)
If you ask me, every portfolio should contain a few Blue Chip Stocks if not many. It does not really depend on the risk appetite of the investor, as these stocks give excellent portfolio gains over the long run. Do consider picking up some of the stocks listed here.
As we go further deep into this article, we’ll look at how the Blue Chip stocks compare with the likes of Growth Stocks, what are the key differences between them, which is the right pick for your portfolio and needs. If you’ve been reading about personal finance, you’ve probably heard of blue chips stocks before. That’s because investing in Blue Chip Stocks is one of the most important aspects of investments and personal finance. Let’s get started.
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 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 harbour 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 colourful as any novel and interwoven with politics and history. Their products and services permeate nearly every aspect of our lives.
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 Blue Chip Stocks List
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:
TSX Symbol Name
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
5 Year Dividend growth: 6.77%
Toronto Dominion Bank
5 Year Dividend growth: 10.39%
Royal Bank Of Canada
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
5 Year Dividend growth: 10.47%
Canadian Imperial Bank of Commerce (CIBC)
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
5 Year Dividend growth: 0.95%
Brookfield Asset Management Inc
5 Year Dividend growth: 6.43%
Intact Financial Corporation
5 Year Dividend growth: 9.28%
2. Real Estate – REIT Stock’s
RioCan Real Estate Investment Trust
5 year Dividend growth: 0.43%
5 year Dividend growth: 2.19%
5 year Dividend growth: 2.53%
3. Energy Stocks
Price/Cash flow: 16.7x
5 year Dividend growth: 11.85%
5 year Dividend growth: 5.39%
Suncor Energy Inc
Price/Earning: – (negative value)
5 year Dividend growth: 23.30%
Imperial Oil Limited
5 year Dividend growth: 4.63%
4. Telecommunication Stocks
5 year Dividend growth: 7.81%
Rogers Communication Inc
5 year Dividend growth: 8.45%
5 year Dividend growth: 10.93%
5. Utility Stocks
5 year Dividend growth: 4.49%
5 year Dividend growth: 9.34%
5 year Dividend growth: 7.42%
Brookfield Renewable Energy Partners LP
5 year Dividend growth: 5.78%
Algonquin Power & Utilities Corp
5 year Dividend growth: 15.16%
5 Year Dividend Growth: –
6. Material Stocks
5 year Dividend growth: 83.20%
7. Information Technology (IT) Stocks
CGI Group Inc
5 Year Dividend growth: 0%
Constellation Software Inc
5 Year Dividend Growth:
8. Consumer Stocks
5 year Dividend growth: 11.35%
Loblaw Companies Limited
5 year Dividend growth: 3.44%
5 year Dividend growth: 15.83%
9. Consumer Discretionary Stocks
Canadian Tire Corporation Limited
5 year Dividend growth: 20.11%
Magna Internations Inc
5 year Dividend growth: 29.71%
5 year Dividend growth: 4.10%
Thomson Reuters Corporation
5 year Dividend growth: 2.93%
10. Infrastructure and Transportation Stocks
Canadian National Railway Company
5 year Dividend growth: 18.28%
Brookfield Infrastructure Partners L.P
5 year Dividend growth: 14.02%
Exco Technologies Limited
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%
5 Year Dividend Growth: NA
Blue Chip Stocks Vs Growth Stocks
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 List of All Time – 2020
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: RY
RBC – Royal Bank of Canada
Opportunity Score: 63%
2. Toronto-Dominion Bank – TSE: TD, NYSE: TD
TD – TD Bank Toronto-Dominion Bank
Opportunity Score: 61%
3. Bank Of Nova Scotia – TSE: BNS, NYSE: BNS
BNS – Scotia Bank
Opportunity Score: 61%
4. Canadian National Railway – TSE: CNR, NYSE: CNI
CNR – Canadian National Railway
Opportunity Score: 58%
5. Suncor – TSE: SU, NYSE: SU
SU – Suncor
Opportunity Score: 42%
6. Bank Of Montreal – TSE: BMO, NYSE: BMO
BMO – Bank of Montreal
Opportunity Score: 54%
7. Bell Canada – TSE: BCE, NYSE: BCE
BCE – Bell Canada
Opportunity Score: 51%
8. Enbridge – TSE: ENB, NYSE: ENB
Opportunity Score: 50%
9. TransCanada Pipeline – TSE: TRP, NYSE: TRP
TRP – TransCanada Pipeline
Opportunity Score: 21%
10. Canadian Natural Resources – TSE: CNQ, NYSE: CNQ
CNQ – Canadian Natural Resources
Opportunity Score: 30%
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
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