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Canadian blue chip stocks can offer steady returns even in volatile markets. You can find Canadian blue chip stocks across various sectors including technology, banking and oil.
Blue chip stocks are stocks of well-established companies with reliable track records. Blue chips are considered valuable and capable of thriving in both strong and weak economies. While there’s no standard definition for blue chip stocks, there are certain characteristics these stocks share.
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The S&P/TSX Composite tracks 250 of the largest publicly-traded companies in Canada. These companies are often regarded as some of the most valuable and reliable heavyweight companies in the country and have a collective market capitalization of $2.55 billion as of August 2021.
However, many other companies listed on the Toronto Stock Exchange (TSX) have a history of providing steady returns and minimal volatility to investors across a range of market sectors and, as such, would qualify as blue chips.
Check out some of the top Canadian blue chip stocks across sectors like information technology, financial services, energy, materials, consumer staples and consumer discretionary. To learn more about US blue chip stocks, check out this guide.
Canadian blue chip stocks in the information technology sector include hardware, software and semiconductor development companies as well as those that offer services related to computers and the internet. This includes:
Companies in the financial sector make up a chunk of Canadian blue chip stocks. These companies tend to have a history of providing solid dividends and include the major banks and asset management companies like:
As drilling and mining is a cyclical industry, natural resource companies have the potential to provide high capital growth. But these can have a reputation for underperforming when the mining industry experiences a downturn. Canadian blue chip stocks offered by established companies include:
Consumer staples are the goods we can’t live without like food, beverages, household products, personal care products and retailers that sell these things. Canadian blue chip stocks in this sector include:
Unlike consumer staples, consumer discretionary refers to goods and services that are considered nonessential or that cater to people’s wants rather than their needs. Such businesses include fast-food restaurants, fashion, entertainment, cars and appliances.
Many successful long-term investors like Warren Buffett have advocated for investing in companies that you believe will be around for a generation or two. The kind of stocks that tend to fit that description are Canadian blue chip stocks that continue to show steady returns. This may translate to consistently higher stock prices and consistent dividend payouts.
It’s a versatile combination that allows you to either reinvest those dividends and compound the earnings over time or take the dividends as a stream of passive income. On top of that, holding investments for the long term also has some significant tax advantages.
As for intangible benefits, investing in a company you can rely on for the long haul takes away much of the anxiety or worry an investor feels about a volatile stock market.
It depends on your investment goals. Canadian blue chips tend to be held as long-term investments or to provide an ongoing stream of income from dividends. While many blue chip stocks can be safe investments, their value doesn’t usually rise much over a short time unless you can scoop them up at a discount during an economic downturn.
Investing in potentially riskier businesses like small caps may earn you higher returns with a faster turnaround. When you invest in a small company, you’re betting that it will become the next big thing. You’re hoping to see your investment multiplied as the company quickly grows and scales up its revenue.
Dividends are most commonly paid quarterly, though some companies pay them 2X a year, annually or irregularly.
There’s a class of blue chips known as the dividend aristocrats that have not only consistently paid dividends, but often rose the percentage dividend payouts. To meet the ranks, companies must deliver at least 5 consecutive years of dividend hikes.
As of December 2021, the dividend aristocrats include companies like Canadian Natural Resources, Canadian Imperial Bank of Commerce, Power Corporation of Canada, BCE Inc. and Enbridge.
Investing in the stock market is never risk-free, but Canadian blue chip stocks are historically less volatile. If you’re interested in buying stocks, compare investing platforms to find one with fees and minimum investment amounts that match your goals.
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