Mature and established companies are often referred to as blue-chip stocks. The term “blue chip” is derived from poker, which often features blue chips to represent the chips with the highest value. As such, these companies should be regarded in the same light. Although blue chips tend to be larger companies, investors often still buy shares of these companies in hopes of attaining reliable growth over time. In this article, I’ll discuss three blue-chip stocks you should consider adding to your portfolio today!
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This stock has steadily beaten the market
Brookfield Asset Management (TSX:BAM.A)(NYSE:BAM) is the first company that comes to mind when I think of blue-chip stocks. It is one of the largest alternative asset management firms in the world, with about $690 billion of assets under management. Through its subsidiaries, Brookfield has exposure to the infrastructure, real estate, renewable energy, and private equity markets.
CEO Bruce Flatt is also often compared to Warren Buffett, one of the greatest investors alive. These two executives are seen as similar for their value investing style, long tenures as CEO, and large ownership stakes in their respective companies. As long as Flatt remains Brookfield’s CEO, I feel like there aren’t many companies better suited for your capital.
You can’t go wrong with one of these stocks
The banking industry is one of the most attractive areas to invest in for Canadians. This is because its highly regulated nature has allowed a small group of companies to establish a massive moat. The Big Five, as they’re known, have been leading the Canadian banking industry for decades. As a result, one of the most common pieces of advice a new Canadian investor will hear is “invest in the company you bank with.” This strategy offers a number of benefits — the most obvious being that the investor should already be familiar with how the company makes money.
Of the Big Five, my top pick is Bank of Nova Scotia (TSX:BNS)(NYSE:BNS). I like this company, because it offers investors excellent growth potential and a reliable dividend. In terms of growth, Bank of Nova Scotia is uniquely positioned as the country’s most international bank. By spreading its business across many geographic regions, Bank of Nova Scotia doesn’t rely on a single area to drive its success. With respect to its dividend, the company has successfully paid shareholders on a recurring basis for the past 189 years.
Some blue-chip stocks can generate massive growth
Certain investors may not see Shopify (TSX:SHOP)(NYSE:SHOP) as a blue-chip company. However, I would disagree with that notion. Shopify is included in the S&P/TSX 60. This is a list of 60 large companies that lead important industries in Canada. If we can agree that the S&P/TSX 60 only contains blue-chip companies, because of the leadership status each company claims in its respective industry, then Shopify is clearly a blue chip.
In contrast with other blue-chip stocks, Shopify is clearly still in its high-growth stage. Since its IPO in May 2015, Shopify stock has gained more than 2,300%! I believe this is only the beginning with respect to Shopify’s growth story. It already claims a large portion of the global e-commerce industry. However, that industry is still poised for massive growth over the coming years. If Shopify can continue to innovate and maintain its lead over its competitors, then shareholders could see excellent gains from here.
