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How to buy Canadian blue chip stocks

Learn how to easily invest in Canadian blue chip stocks today.

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.

What are blue chip stocks?

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.

  • Pays dividends. Dividends are regular payments made to shareholders from a company’s revenue. Because blue chips companies are well established, profit can be passed on to shareholders instead of being reinvested into the business.
  • Large market capitalization: Many blue chip stocks come from large-cap companies. Canadian blue chip companies typically have stock market valuations of CAD $500 million or more.
  • Part of a major index: You can find blue chip stocks in major market indexes like the S&P/TSX Composite Index. To diversify your portfolio, you can invest in ETFs and index funds that track these indexes.

How to buy blue chip stocks

  1. Choose a stock trading platform. The right platform will depend on your needs and investing experience. Compare investment platforms below.
  2. Open your account. You’ll need an ID, bank details and Social Insurance Number (SIN).
  3. Confirm your payment details. You’ll need to fund your account with a bank transfer.
  4. Find the stock you want to buy. Search the platform and buy stocks.

What are Canadian blue chip stocks?

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.

Information technology companies

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:

Banking and financial services

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:

Energy & materials (incl. mining)

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

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:

Consumer discretionary

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.

Should you invest in Canadian blue chip stocks or small cap stocks?

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.

Blue chip stocks vs. penny stocks

  • Blue chip stocks. A blue chip stock is usually an older, well-established company that has a reliable history of weathering against tough times and of growing profits.
  • Penny stocks. Penny stocks tend to trade for less than $5 and are also called micro-cap stocks or small-cap stocks. The idea is to buy them for a low price with the potential for big profits later. They’re generally riskier, speculative stocks.

The benefits of dividends

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.

Compare stock trading platforms to buy blue chip stocks

1 - 6 of 6
Name Product Finder Rating Stock Trading Fee Account Fee Available Asset Types Offer
OFFER
CIBC Investor's Edge
Finder Rating:
★★★★★
4 / 5
$4.95 - $6.95
$0 if conditions met, otherwise $100/year
Stocks, Bonds, Options, Mutual Funds, ETFs
Young investors 18 to 24 can get free online trades and a $0 annual account fee. Conditions apply.
FREE TRADES
Wealthsimple Trade
Finder Rating:
★★★★★
3.9 / 5
$0
$0
Stocks, ETFs
Get 2 free stocks when you deposit and trade $150.
Scotia iTRADE
Finder Rating:
★★★★★
3.8 / 5
$4.99 - $9.99
$0
Bonds, Options, Mutual Funds, ETFs, GICs, International Equities
Interactive Brokers
Finder Rating:
★★★★★
4.1 / 5
Min. $1.00, Max. 0.5%
$0
Stocks, Bonds, Options, ETFs, Currencies, Futures
Questrade
Finder Rating:
★★★★★
4.2 / 5
$4.95 - $9.95
$0
Stocks, Bonds, Options, Mutual Funds, ETFs, GICs, International Equities, Precious Metals
Get $50 in free trades when you fund your account with a minimum of $1,000.
OFFER
Qtrade Direct Investing
Finder Rating:
★★★★★
4.1 / 5
$6.95 - $8.75
$0 if conditions met, otherwise $25/quarter
Stocks, Bonds, Options, Mutual Funds, ETFs, GICs
Get almost $500 in commission free trades when you fund your new account with a minimum of $10,000. Conditions apply. Ends August 31, 2022.
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Compare up to 4 providers

Bottom line

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.

Disclaimer: This information should not be interpreted as an endorsement of futures, stocks, ETFs, CFDs, options or any specific provider, service or offering. It should not be relied upon as investment advice or construed as providing recommendations of any kind. Futures, stocks, ETFs and options trading involves substantial risk of loss and therefore are not appropriate for all investors. Trading CFDs and forex on leverage comes with a higher risk of losing money rapidly. Past performance is not an indication of future results. Consider your own circumstances, and obtain your own advice, before making any trades.

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