When you buy a stock in a company, you receive a piece of the company and become a part-owner. In this article, let us look at some of the top blue-chip Canadian companies trading on the TSX and see if they need to be part of your portfolio today. These large-cap companies also pay investors a dividend making them extremely attractive to income investors as well
Royal Bank of Canada
The largest bank in Canada by market capitalization, the Royal Bank of Canada – RBC – is a multinational banking and financial services corporation. RBC is also one of the largest banks in the world. Back in 2017, the bank was named by the Swiss-based Financial Stability Board as one of the 20 most systemically important banks on the planet.
Like any bank, the main source of revenue for RBC is lending to individuals and institutions. Besides, the bank’s personal and commercial banking segment offers check and savings accounts, credit cards, mortgages, loans, investment products, payments, international trade, business advisory services, etc.
Royal Bank holds over $1.4 trillion in assets. It has a presence in 36 countries with a client base of over 17 million.
The bank has a Return On Equity (RoE) that is amongst the best in the industry. Compared to Canadian stock market’s Price/Earning (P/E) Ratio, the bank is less expensive at a P/E of 15.2. The forward price/earnings Ratio is at 12.05.
Besides, most analysts expect the earnings per share (EPS) of RY bank to grow in double digits on average over the next 2 years, which augurs well for its shareholders. RY stock has a forward yield of 3.47%
|Market Cap||C$175.1 Billion|
Headquartered in Toronto, Canada, the Toronto-Dominion Bank, and its subsidiaries are collectively known as the TD Bank Group (TD). This financial giant offers a full range of products and services to over 26 million customers worldwide through three key business lines:
- Canadian Retail
- U.S. Retail and
- Wholesale Banking
TD Banks offers all these products and services through a network of 1,091 branches and 3,509 automated teller machines (ATMs) in Canada.
Toronto Dominion Bank’s current P/E on a trailing twelve month basis is 13.3 and the forward price/earnings Ratio also stands good at 12.3.
Even amid the Covid Pandemic, the bank managed to achieve an increase in profitability, due to its focus on cost saving measures. TD Bank stock has a forward yield of 3.6%.
|Market Cap||C$159.3 Billion|
Bank of Nova Scotia (BNS)
Headquartered in Toronto, The Bank of Nova Scotia provides various banking products and services in Canada. It also has presence in other regions such as the US, Mexico, Peru, Chile, Colombia, the Caribbean and Central America among others.
The bank operates through Canadian Banking, International Banking, Global Banking and Markets, and Global Wealth Management segments. It offers financial advice and solutions, and day-to-day banking products, including debit and credit cards, chequing and saving accounts, investments, mortgages, loans, and insurance to individuals; and business banking solutions comprising lending, deposit, cash management, and trade finance solutions to small businesses and commercial customers, including automotive financing solutions to dealers and their customers.
The company operates a network of 950 branches and approximately 3,650 automated banking machines in Canada and approximately 1,900 branches and 5,500 ATMs internationally.
The bank pays its shareholders a juicy 4.50% dividend yield. Like most of its peers in the banking sector, Scotiabank has successfully recovered from the March 2020 pullback and has uninterruptedly increased its dividends to shareholders by a CAGR of 6% since 2009.
The bank’s current P/E on a trailing twelve-month basis is 14.9 and the forward price/earnings ratio also stands good at 10.3. All these factors could make it an excellent stock to include in your portfolio.
|Market Cap||C$96.1 Billion|
Enbridge operates as an energy infrastructure company in Canada and the US. The company operates through five segments:
- Liquids Pipelines
- Gas Transmission and Midstream
- Gas Distribution
- Green Power
- Transmission Energy Services
The Liquids Pipelines segment operates common carrier and contract crude oil, natural gas liquids (NGL), and refined products pipelines and terminals. The Gas Transmission and Midstream segment owns interests in natural gas pipelines, and gathering and processing facilities.
The Gas Distribution segment is involved in natural gas utility operations. The Green Power and Transmission segment operates renewable energy assets, such as wind, solar, geothermal, and waste heat recovery facilities. The Energy Services segment provides energy marketing services to refiners, producers, and other customers.
The company was formerly known as IPL Energy Inc. and changed its name to Enbridge Inc. in October 1998. Enbridge Inc. was founded in 1949 and is headquartered in Calgary, Canada.
The company’s current P/E on a trailing twelve month basis is 14.7 and the Forward Price/Earnings Ratio also stands good at 15.
In its recently released earnings, the net income for the twelve months ending March 31, 2021 was $4.793 Billion, a 214.82% increase year-over-year. Overall, the company has maintained its strong financial position at the end of the first quarter which provides financial flexibility to execute its secured capital program. As Enbridge executes on its secured capital program in 2021, the balance sheet is anticipated to strengthen further in 2022, as projects placed into service in 2021 will contribute towards incremental annualized EBITDA.
ENB stock has a forward dividend yield of over 7%.
|Market Cap||C$93.3 Billion|
Canadian National Railway
Canadian National Railway Company, together with its subsidiaries, engages in the rail and related transportation business. The company’s portfolio of goods comprises petroleum and chemicals, fertilizers, coal, metals and minerals, forest products, grain, intermodal, and automotive products serving exporters, importers, retailers, farmers, and manufacturers.
It operates a network of approximately 20,000 route miles of track in Canada and mid-America ranging from the Atlantic and Pacific oceans to the Gulf of Mexico. Canadian National Railway Company was founded in 1919 and is headquartered in Montreal, Canada.
The company’s current P/E on a trailing twelve month basis is 26.06. Earnings are forecast to grow 7.49% per year for the next 1-3 years.
In the first quarter of 2021, excluding one-time items, adjusted profits were $872 million or $1.23 per share, compared with $870 million or $1.22 per share in the first quarter of 2020.
The company is now targeting double-digit adjusted diluted EPS growth for 2021 versus high single-digit EPS growth previously. This is backed by the assumptions of high single-digit volume growth in terms of revenue ton-miles. The company still expects to deliver free cash flow in the range of $3 billion to $3.3 billion, which will drive further improvement in free cash flow conversion.
CNR stock currently has a forward yield of 1.9%.
|Market Cap||C$91.3 Billion|
Brookfield Asset Management
Brookfield Asset Management is a leading global alternative asset manager and one of the largest investors in real assets.
Its investment focus is on real estate, renewable power, infrastructure and private equity assets. It manages a range of public and private investment products and services for institutional and retail clients.
The company has a strong balance sheet with over $30 billion of capital invested, primarily in its four listed partnerships:
- Brookfield Property Partners
- Brookfield Infrastructure Partners
- Brookfield Renewable Partners and
- Brookfield Business Partners
This access to large-scale capital enables the company to make investments in sizable, premier assets across geographies and asset classes that few managers are able to do.
The company’s current P/E on a trailing twelve-month basis is on the higher side of the stock market at 56.98 and the forward price/earnings ratio stands at 33.11.
In its recently released Q1 earnings of 2021, Brookfield Asset Management far exceeded the consensus estimate, powered by strong gains in private equity and asset management. It has several monetizations expected to close in the near term and is on track to achieve $1 billion of gross carried interest in 2021.
Brookfield Asset Management has a forward yield of 1.05%.
|Market Cap||C$89.5 Billion|
Bank of Montreal
Bank of Montreal provides diversified financial services primarily in North America. It operates through three groups:
- Personal and Commercial Banking,
- BMO Wealth Management and
- BMO Capital Markets
The company’s personal banking products and services include checking and savings accounts, credit cards, mortgages, and financial and investment advice services. And commercial banking products and services comprise business deposit accounts, commercial credit cards, business loans and commercial mortgages, etc.
The wealth management segment offers products and services such as investment and wealth advisory services. Additionally, the company provides research and access to markets for institutional, corporate, and retail clients; new product development and origination services, as well as risk management advice and services to hedge against fluctuations; and funding and liquidity management services to its clients.
The company was founded in 1817 and is headquartered in Montreal, Canada.
The company’s current P/E on a trailing twelve-month basis is at 14.84 and the forward price/earnings Ratio also stands good at 11.05.
The company reported its net income increased by 27% and adjusted net income increased 26% from the prior year in Q1. Adjusted results exclude the amortization of acquisition-related intangible assets and acquisition integration costs. The increase in net income was driven by net revenue growth of 6%, with increases across all operating groups, a decrease in expenses and lower provisions for credit losses.
Return on equity (ROE) was 15.7%, compared with 13.3% in the prior year, and adjusted ROE was 15.8%, compared with 13.5%. BMO stock provides investors with an attractive forward yield of 3.4%.
|Market Cap||C$78.9 Billion|
Canadian Pacific Railway
Canadian Pacific Railway Limited, together with its subsidiaries, owns and operates a transcontinental freight railway in Canada and the United States.
The company transports bulk commodities, including grain, coal, potash, fertilizers, and sulphur; and merchandise freight, such as energy, chemicals and plastics, metals, minerals and consumer, automotive, and forest products.
It also transports intermodal traffic comprising retail goods in overseas containers. The company offers rail and intermodal transportation services through a network of approximately 12,700 miles serving business centers in Quebec and British Columbia, Canada; and the United States Northeast and Midwest regions.
The first-quarter results of 2021 for Canadian Pacific Railway Limited were positive overall. Revenues of $2 billion were in line with what the analysts predicted, Canadian Pacific Railway surprised by delivering a statutory profit of $4.50 per share, modestly greater than expected. CP stock has a forward yield of 0.8%.
|Market Cap||C$63.4 Billion|
Canadian Imperial Bank of Commerce
Canadian Imperial Bank of Commerce, a diversified financial institution, provides various financial products and services to personal, business, public sector, and institutional clients in Canada, the United States, and internationally.
The company operates through four strategic business units: Canadian Personal and Small Business Banking; Canadian Commercial Banking and Wealth Management; U.S. Commercial Banking and Wealth Management; and Capital Markets.
Canadian Imperial Bank of Commerce last released its quarterly earnings results on February 24th, 2021. The bank reported $3.58 in earnings per share for the quarter, beating analysts consensus estimates of $2.18 by $1.40. The firm reported revenue of $3.86 billion for the quarter, compared to the consensus estimate of $3.77 billion.
The lender has generated $7.21 in earnings per share over the last year. The company’s current P/E on a trailing twelve-month basis is at 14.63 and the forward price/earnings Ratio also stands at 10.34. CIBC stock has a forward dividend yield of 4.26%.
|Market Cap||C$59.92 Billion|
TransCanada (TC) Energy Corporation
TC Energy Corporation operates as an energy infrastructure company in North America. It operates through Canadian Natural Gas Pipelines, U.S. Natural Gas Pipelines, Mexico Natural Gas Pipelines, Liquids Pipelines, and Power and Storage segments.
The company builds and operates a 92,600 km network of natural gas pipelines, which transports natural gas from supply basins to local distribution companies, power generation plants, industrial facilities, interconnecting pipelines, LNG export terminals, and other businesses.
It also has regulated natural gas storage facilities with a total working gas capacity of 535 billion cubic feet.
Despite energy market volatility, weather events, and the ongoing impacts of COVID-19, across its extensive operations, the company announced in its recent earnings that utilization levels remain in line with historical and seasonal norms. Given the predictable nature of its cash flow streams, the company’s outlook for full-year 2021 comparable earnings remains generally consistent with last year’s record results.
TC Energy has a forward yield of over 5%.
|Market Cap||C$58.9 Billion|
Hope the details and business fundamentals of these top 10 companies of Canada will help you shape your decision on including their stocks in your portfolio. Happy investing!