Blue-chips are a safe haven for investors to place their bets, especially in a turbulent or volatile market. Blue-chip stocks are household names in their sectors, have excellent management teams, a large market cap, payout good (and growing) dividends every year, and are stable even in economic downturns.
Every portfolio should have a decent number of blue-chip stocks to balance out and diversify one’s investments. These companies ensure that your portfolio grows in good times and doesn’t suffer during tough ones.
Generally, blue-chip stocks grow at a moderate pace, so it is unlikely that they will outperform the market by a large margin, but they are consistent growth machines.
In this article, we are looking at some of the best blue chips across sectors in the Canadian market.
Royal Bank of Canada
Market cap: $178.6 billion
Royal Bank of Canada is the largest bank in the country. It serves 17 million clients in Canada, the USA, and 27 other countries. Apart from personal and commercial banking, it also provides wealth management, insurance, and investor services. The bank reported a net income of $4 billion for the quarter ended April 30, 2021, up $2.5 billion from the corresponding quarter in 2020. It held its own in 2020, reporting a net income of $11.4 billion for the whole year, down from $12.36 billion in 2019. R.Y. stock pays a forward dividend yield of 3.45%.
Market cap: $151.3 billion
Toronto Dominion is the second-largest bank in the country. It offers a range of financial products and services to over 26 million customers worldwide and has over 1,091 branches in Canada. Its key business lines include Canadian retail services, U.S. retail operations, and wholesale banking services.
In the Q2 of 2021, the bank reported net earnings of $3.7 billion, indicating a 144% rise from the prior year. It also offers a quarterly dividend of $0.79 per share, representing a 3.6% yield. Additionally, it has provided its investors an ROE of 14% over the past decade with an 8% growth in their earnings.
Bank of Nova Scotia
Market cap: $95.3 billion
Bank of Nova Scotia is the third-largest bank in the country. It offers a range of banking products and services to over 10 million retail, small business, and commercial banking customers in the US, Canada, Mexico, Peru, Chile, Colombia, the Caribbean, and Central America. In the past six months, the bank has gained around 15%.
Its Q2 results of the fiscal year 2021, indicated the firm generated revenue of $6.41 billion, which was 11.11% higher than last year. Also, it pays the highest dividend amongst its peers, which amounts to a yield of 4.54%.
Brookfield Asset Management
Market cap: $86.2 billion
Brookfield Asset Management is considered one of the top asset management companies in the world. It is an alternative asset management firm that focuses on tangible assets, including real estate, infrastructure, and utilities. Additionally, Brookfield also has multiple businesses, from renewable energy to some of the best infrastructure assets in the world.
In the Q1 of 2021, the company achieved its highest-ever FFO (funds from operations) at $2.8 billion and a net income of $3.8 billion. Though its forward dividend yield is only 1.06%, since August 1995, the stock has grown nearly 4,000%, representing an average annual gain of 15.3% for investors.
Market cap: $46.8 billion
Manulife Financial Corporation is the country’s largest insurance company. This multinational insurance company and financial service provider has a customer base of nearly 28 million while operating across Canada and Asia under the name “Manulife,” while its operations are mainly through its John Hancock Financial division in the USA.
Due to the Covid-19 impact, its core earnings are still under considerable pressure. However, Manulife is positioned much better than other insurance companies today, and in the Q1 of 2021, it had witnessed a massive growth of 67% year-over-year. Additionally, the stock is also a dividend aristocrat paying a dividend of $1.12 per share, thus yielding a juicy 4.67%.
Market cap: $37.7 billion
Sun Life Financial is one of the oldest insurance companies in the world, spinning back to 1865, and is also one of the largest insurance companies in the whole world. With a customer base of 6 million in Canada, Sun Life provides services like financial advice and planning, Life, health, travel insurance products, saving and investment products, customized health programs, etc.
In the Q1 of 2021, the company had reported a net income of $937 million that was significantly higher than the previous year. Also, its EPS (earnings per share) and ROE (return on equity) have shown 11% and 15.3% growth, respectively.
Market cap: $26.2 billion
Fortis Inc. is one of the largest utility companies in the continent based in St. John’s, Newfoundland, and Labrador. The company operates across Canada, the United States, Central America, and the Caribbean.
Fortis has always been a consistent performer and has offered average total shareholders returns of 13% over the last two years. Its recent second-quarter results have shown adjusted net earnings of $0.55 per common share that is significantly higher than the second quarter of last year after excluding the impact of foreign exchange. The company also pays a quarterly dividend of $0.505 per share, giving investors a forward dividend yield of 3.49%.
Market cap: $9.645 billion
Canadian Utilities Limited, a member of the ATCO Group of companies, is a Canada-based worldwide organization of companies dealing in three main business divisions: power generation, utilities, and global enterprises.
It operates across east Alberta, Yukon, the Northwest Territories, the Lloydminster area of Saskatchewan, and Western Australia. The current quarter financial report of the company showed adjusted earnings of $115 million against $94 million of last year, thus indicating an increase of $21 million year over year. Also, Canadian Utilities has a forward dividend yield of 5%. Its dividends are one of the most consistent ones as the company has been raising payouts for the last 49 consecutive years.
Market cap: $14.9 billion
Emera Inc. is an energy and services provider engaged in the generation, transmission, and distribution of electricity. The company generates electricity through coal-fired, natural gas and oil, hydro, wind, solar, petcoke, and biomass-fueled power plants. Emera operates through the Florida Electric Utility, Canadian Electric Utilities, other electric utilities, gas utilities and infrastructure, and other segments.
Its Q1 results of 2021 showed a net income of $273 million against $523 million in Q1 of 2020. Still, its quarterly adjusted EPS increased by $0.17 to $0.96, resulting from the continued strength in the regulated portfolio and other strategic moves. Additionally, it also has an attractive dividend yield of 4.39%.
Brookfield Renewable Corp.
Market cap: $15.7 billion
Brookfield Renewable Corporation mainly focuses on the real estate, infrastructure, renewable power, and private equity sectors. It has many renewable energy power generating facilities primarily located in Brazil, Colombia, the United States, and Europe. With an installed capacity of almost 12,812 megawatts, the company operates its hydroelectric, wind, and solar power plants. In Q1 of 2021, the company reported a net loss of $55 million, significantly lower than the net income of $89 million achieved a year ago. Its revenue also decreased by 2.8% YOY.
Algonquin Power & Utilities
Market cap: $12 billion
Algonquin Power & Utilities Corp is a Canada-based renewable energy company that uses its subsidiaries: Liberty Power and Liberty Utilities, to operate in Canada, the United States, Chile, and Bermuda. The company produces electrical energy through non-regulated renewable and clean energy power generation facilities. It also has hydroelectric, wind, solar, and thermal facilities capable of generating approximately 2.1 gigawatts of energy. The stock has gained around 14.38% in the past year. In the Q1 of 2021, Algonquin Power reported net earnings of $13.9 million, significantly higher than the net loss of $63.8 million reported in year ago period. Additionally, it offers a dividend yield of 4.41%.
Market Cap: $55.9 billion
BCE Inc. is Canada’s second-biggest telecom service provider and has various mass media assets under its name. Formerly known as Bell Canada Enterprises Inc, the company provides wireless, wireline, Internet, and television (T.V.) services to Canada’s residential, business, and wholesale customers.
Its three key business segments include Bell Wireless, Bell Wireline, and Bell Media. These days BCE is investing billions for ramping up its 5G network rollout, for which its investors would likely see significant earnings growth in the coming years. Additionally, the company also has a dividend yield of 5.65%, supported by strong free cash flows.
Market Cap: $32.248 billion
Rogers Communications Inc. is a Canada-based media and communication company. It operates through three business segments, namely wireless, cable, and media. With a subscriber base of around 11 million, the company provides services like access to mobile internet, wireless voice, enhanced voice, etc.
It also offers device delivery services; and postpaid and prepaid services under the Rogers, Fido, and Chatr brands. In the Q2 of 2021, its wireless service and cable service revenue grew by 2% and 5%, respectively, while its EBITDA (earnings before interest, tax, depreciation, and amortization) also rose by 10% and 8%. The media segment had a massive 84% hike in revenue. Additionally, investors would get a 3.1% yield in dividends.
Market Cap: $35.1 billion
Telus Corporation offers a range of products and services in the telecommunications and information technology segment and is recognized as Canada’s fastest mobile network provider. With a 16 million subscriber base, Telus operates through wireless and wireline segments. Telus is actively investing in 5G and is also expanding its suite of solutions.
The company’s Q1 financials of 2021 showed consolidated revenue growth of 8.9%, while the EBITDA has also increased by 1.9%. In addition, the company has steadily increased its dividend payments for the last 17 years at a 10-year CAGR of 12% and presently has a forward yield of 4.6%.
Canadian National Railway
Market Cap: $75.8 billion
Canadian National Railway Company is Canada’s largest railway company that has its operations based on a network of 19,500 route miles of track across the Canadian and the U.S. regions and uses its network to connect the Pacific and Atlantic coasts in Canada with the Gulf Coast in the United States.
Its portfolio of offerings comprises petroleum and chemicals, grains and fertilizers, coal, etc. Despite the pandemic, the stock performed very well last year. Also, the recent Q2 financials showed the company’s operating income had increased by 76% along with a 12% rise in revenues. Earnings are expected to rise further as the company is about to close the buyout of one of the USA’s largest railroads.
Canadian Pacific Railway
Market Cap: $61.1 billion
Canadian Pacific Railway Limited, the second-largest railway company in Canada, is involved in rail and intermodal transportation services and transports a range of commodities like grains, coal, potash, fertilizers, and sulphur as well as some merchandise freight like energy, chemicals and plastics, metals, minerals and consumers, automotive, and forest products.
Its network of approximately 13,000 miles spans across Quebec and British Columbia, Canada; and the United States Northeast and Midwest regions. Recently, the Q2 results of the company showed a 15% hike in revenues to $2.05 billion while EPS went up to $1.86, indicating a 100% rise. Moreover, the stock pays a dividend yield of 0.83%.
Sector: Consumer Defensive
Market cap: $15.696 billion
Metro Inc. operates as a retailer in Canada’s food and pharmaceutical sector having stores under brands like Metro, Metro Plus, Super C, and others. Through its 953 grocery stores and 650 drug stores, the company sells fresh and grocery products, baked goods, prepared foods, meats, general merchandise, non-perishable goods, dairy products, drug stores, pharmacy products, etc.
The Q2 financials of 2021 showed a sales growth of 5.1%. It also increased its net earnings and EPS by 6.8% and 8.7%, respectively. In addition, the company has a policy of paying 30% to 40% of its net profits from the previous year before as dividends to investors.
Sector: Consumer Defensive
Market cap: $28.8 billion
Loblaw Companies Limited is another Canadian food and pharmacy company that sells grocery, pharmacy, health and beauty, apparel, general merchandise, financial services, wireless mobile products, etc. It has two key business units: Retail and Financial and operates under 22 regional and market segment banners.
The company is repeatedly excelling with its private-label brands these days. Its 2021 second-quarter earnings report showed an increase of $534 million, representing a 4.5% rise compared to Q2 of 2020. The operating income and EBITDA, and shareholders’ earnings also increased by a whopping 86.1%, 36%, and 131.9%, respectively, compared to last year.
Sector: Consumer Defensive
Market Cap: $17.8 billion
Dollarama Inc has a series of dollar stores in Canada that offer general merchandise, consumables, and seasonal products. Apart from selling its products through 1,355 retail stores, Dollarama is also actively engaged in online sales.
The company plans to open another 600 stores over the next ten years and is building a solid growth trajectory in the South American region. In its Q1 of fiscal 2022, the company achieved a year over year growth of 13% in sales and a 16.1% growth in the EBITDA, while its diluted net earnings per common share saw a massive 32.1% rise.
Sector: Consumer Defensive
Market Cap: $52.7 billion
Alimentation Couche-Tard Inc., also known as Couche-Tard is a multinational operator and licensor of convenience stores. It sells products like tobacco, grocery items, candies and snacks, beverages, fresh food offerings, road transportation and aviation fuels, and energy for stationary engines across its 12,382 convenience stores.
Additionally, it also sells lottery tickets, calling and gift cards, postage stamps, and bus tickets; issuance of money orders; and provision of automatic teller machines and car wash services. The company operates under the banners of Circle K, Couche-Tard, Holiday, Ingo, and Mac. It has been a massive wealth creator for long-term investors as the stock has returned over 1,200% to shareholders in the last decade.
Market cap: $ 41.4 billion
Constellation Software Inc is an acquirer, builder, and manager of vertical market software businesses in the United States, Canada, Italy, Germany, India, United Kingdom, Brazil, Switzerland, Austria, and Israel. The company serves government and government-related customers along with commercial customers and functions through two business segments: Public Sector and Private Sector. It has been a growth bomb and offered a 14,000% return since its IPO in 2006. Constellation remains one of the top bets on Bay Street, given its acquisition-driven business model.
Market cap: $99.6 billion
Enbridge Inc. is an energy infrastructure company operating through five key segments: liquids pipelines, gas transmission, and midstream, gas distribution and storage, renewable power generation, and energy services. With over 5,000 kilometers of pipelines across Canada and the United States, the company transports crude oil and natural gas around North America.
Enbridge had a solid start to 2021. In the Q1 of 2021, the company delivered adjusted earnings of $1.6 billion against $1.1 billion the previous quarter. Moreover, distributable cash flow (DCF) also showed an improvement of $0.6 billion on a quarter-over-quarter basis. Additionally, it has a strong dividend yield of 6.36%.
Market cap: $59.7 billion
T.C. Energy Corporation is a Canada-based North American energy infrastructure company operating across Canada, the United States, and Mexico. It has three core business lines: Natural Gas Pipelines, Liquids Pipelines, and Energy. The company uses a network of 93,400 km natural gas pipelines to transport natural gas from supply basins to local distribution companies, power generation plants, industrial facilities, interconnecting pipelines, LNG export terminals, and other businesses.
Its recent financials showed a net income of $982 million compared to $1.3 billion in the same period of last year. Also, the company will be paying off a quarterly dividend of $0.87 per common share, indicating an annualized dividend of $3.48 per common share.
Canadian Natural Resources
Market cap: $48.9 billion
Canadian Natural Resources Limited is engaged in acquiring, exploring, developing, producing, and marketing crude oil and natural gas, including NGLs. The company deals in light and medium crude oil, synthetic crude oil (SCO), primary heavy crude oil, bitumen (thermal oil), and Pelican Lake heavy crude oil.
It possesses two crude oil pipeline systems and a 50% working stake in a Primrose-based 84-megawatt cogeneration plant. The company’s Q1 report of this year showed an increase in adjusted net earnings by $1,043 million and of the FFO by $1,004 million compared to the last quarter. Additionally, the report also showed approximately $2.2 billion of dividends payments.
Brookfield Energy Renewable Partners
Market cap: $13.5 billion
Brookfield Renewable Energy Partners L.P. is one of the leading renewable energy suppliers operating primarily in the North American, Colombian, Brazilian, European, Indian, and Chinese regions. The company uses hydroelectric, wind, solar, distributed generation, pumped storage, cogeneration, and biomass sources to generate electricity.
In the Q1 of 2021, Brookfield’s FFO grew by 21% compared to the prior-year period. Lastly, the company boasts a dividend yield of 3% and has rewarded its investors with annualized total returns of close to 18% over the past two decades. Presently, including dividends, the company expects its shareholders to see long-term annualized returns between the 12% to 15% range
Market cap: $37.3 billion
Suncor Energy Inc. is engaged in developing petroleum resource basins in Canada’s Athabasca oil sands. It also explores, acquires, develops, produces, transports,refines, and markets crude oil outside Canada. Additionally, the company also sells petroleum and petrochemical products under the Petro-Canada name, primarily in Canada. Forbes has ranked it as the 252nd-largest public company in the world.
The company’s recent financials showed an FFO of $2.362 billion compared to $488 million last year. There were also operating earnings of $722 million, unlike last year’s operating loss of $1.345 billion. Also, a quarterly dividend of $0.21 per share was approved by Suncor’s board of directors.
Sector: Consumer Discretionary
Market cap: $11.8 billion
Canadian Tire Corporation Limited is a Canada-based retail company. The iconic Canadian brand is engaged in the automotive, hardware, sports, leisure, and housewares sectors. The company’s three major business segments are retail, CT REIT, and financial services. The several banners under Canadian Tire include SportChek, Marks, and Party City.
Over the last decade, the stock has grown by a massive 300%. Its comparable sales grew by 19.3% in its first quarter, while e-commerce sales surged 257%. The stock also has a modest dividend yield of 2.46%, as it retains most of its earnings for investment and growth.
Sector: Consumer Discretionary
Market cap: $ 24.9 billion
Magna International Inc is a Canada-based mobility technology company engaged in designing, engineering, and manufacturing components, systems, subsystems, assemblies, and modules for original equipment manufacturers of vehicles and light trucks worldwide. The company has four operating segments: Body exteriors & structures, power & vision, seating systems, and complete vehicles.
Magna is one of the largest Canadian companies and has been recognized by Forbes on “2020 Forbes Global 2000”. This year, the company’s Q1 statement showed an 18% increase in sales along with a 109% increase in the income from operations before tax. Diluted EPS too rose by a stellar 136% year over year. Additionally, the stock boasts a dividend yield of 2.10%.
Sector: Consumer Discretionary
Market cap: $64.8 billion
Thomson Reuters Corporation is a multinational media conglomerate that provides business information services across the USA, Europe, the Middle East, Africa, and the Asia Pacific regions. The company has five main segments: Legal professionals, corporate, tax & accounting, Reuters news, and global print providing services like Legal Professionals segment offers research, content-enabled technology solutions for legal, tax, regulatory, compliance, and I.T. professionals, research and workflow products focusing on taxation, accounting, auditing, etc.
The Q1 financials of this year showed a 4% revenue growth along with a 34% increase in operating profits. The company also possesses a dividend yield of 1.55%.
Market cap: $38.2 billion
Barrick Gold Corporation belongs to the mining industry and is engaged in the exploration, mining development, production, and sale of gold and copper. The company mainly undertakes its gold and copper mining operations across 16 operating sites in 13 countries, including Argentina, Canada, Dominican Republic, Mali, Tanzania, the United States, Chile, Saudi Arabia, Africa, etc. Its Q1 financials stated a 31% increase in copper revenue and a $0.5 billion increase in net cash. It’s operating cash flow stood at $1.3 billion while free cash flow was close to $1 billion in Q1. Additionally, the company had paid shareholders $250 million via stock repurchases and dividends in the quarter ended in March.
Market cap: $32.5 billion
Waste Connections, Inc. offers waste collection, transfer, disposal, and recycling services across the United States and Canada. The company has five key business segments: Southern, Western, Eastern, Canada, Central, and Corporate. Its offerings include collection services to various commercial, residential, industrial, municipal, and E&P customers and recycling services for different recyclable materials. In Q1 this year, the company posted revenue and EBITDA of $1.396 billion and $433.2 million against $1.352 billion and $408.5 million in the prior-year period.
Sector: Real Estate
Market cap: $10.6 billion
CAPREIT is considered one of the largest real estate investment trusts in Canada. The company owns about 57,000 suites, including some manufactured housing sites and townhomes in Canada. Also, it has got ownership of approximately 5,800 suites in the Netherlands indirectly by investing in ERES. CARPEIT’s business model is about acquiring real-estate properties and make profits by renting those properties. However, the company got hit hard by COVID-19 due to economic lockdowns imposed by the federal and provincial governments. However, as the economy reopens, this stock is well poised to make a strong comeback in 2021 and beyond.
Sector: Real Estate
Market cap: $7.137 billion
RioCan Real Estate Investment Trust is Canada’s second-largest real estate investment trust. It is engaged in the management and development of increasingly mixed-use properties located in Canada’s prime and high-density transit-oriented areas where most Canadians usually want to shop, live, and work.
Its portfolio consists of 289 primarily retail properties (including office space, residential rental units and development properties) having a net leasable area of 44 million square feet. Just like CAPREIT, RioCan also felt the full impact of the COVID crisis. Still, its net income for Q1 of 2021 increased to $106.7 million from $102.8 million in 2020. RioCan also has a dividend yield of 4.20%.
The final takeaway
Blue-chip companies manage debt well and have a record of holding their own even in challenging markets. They have diversified operations and strong brand recognition while operating across geographies, making them the perfect instruments to mitigate risk. Even if these companies get into a slump for a couple of years, there isn’t much fluctuation in their share prices or dividend payouts because the markets assume that one of their geographies or brands will cover up for the others.
Typically, one invests in blue-chip stocks with a long-term horizon. They are great options to generate healthy, regular income thanks to dividend payments, and are the best bet to supplement your income in retirement,