Blue-chip stocks are excellent investments over the long term. They provide a mixture of safety, consistency, and growth that’s unmatched and unbeatable.
In this article, I will discuss three Canadian blue-chip stocks for you to consider.
BCE stock: A telecommunications giant with a strong history
The first Canadian blue-chip stock I would like to highlight is BCE (TSX:BCE). BCE is Canada’s largest telecom services company with a market capitalization of $54 billion and a long history of stability. Today, BCE stock is yielding 6.47%, as the company continues to generate strong cash flow, financial strength, and stability.
In fact, in the fourth quarter (Q4) of 2022, BCE reported an 18% increase in cash flow from operations as all parts of the business performed well. Looking at the longer-term picture shows us more of the same. In the last 10 years, BCE’s cash flow was above $7 billion every year. Also, its free cash flow, which is operating cash flow minus capital expenditures, was above $3 billion. In Q4 2022, free cash flow growth actually accelerated and was $376 million, up more than 60%.
Fortis: It’s all about safety and consistency
Fortis (TSX:FTS) is another blue-chip stock that can set you up for long-term growth, stability, and income. This is a large $26 billion utility company that’s diversified within the utilities sector. Its utilities are spread out across North America with a roughly 50/50 split.
Furthermore, Fortis has a diversified list of assets, such as transmission assets, distribution assets, as well as cleaner energy fuel assets and renewable energy assets. This long list of geographical and asset exposure provides a good diversification that breeds reliability and consistency.
A long track record of profitable growth and increasing dividend payments are Fortis’s biggest strengths. In fact, Fortis’s revenue has grown 32% in the last five years, and its net income has grown 21%. Also, Fortis has an enviable dividend-growth history. With 49 years of dividend growth under its belt and an expected dividend-growth rate of 4-6% to 2027, Fortis stock is a blue-chip winner — not a boring utility stock.
TD Bank: A blue-chip stock that has weathered many storms and come out on top
Toronto-Dominion Bank (TSX:TD) is the last blue-chip stock that I would like to single out in this article. As one of Canada’s top two banks and North America’s top five banks, TD Bank stock is a sure-fire way to gain long-term success in your investing.
In fact, in the last 20 years, TD Bank stock has appreciated 440%, all while paying a consistent and growing dividend. While this performance is not necessarily a guarantee of future performance, it is a testament to the strength of this bank. During this 20-year period, TD Bank has had its share of struggles. For example, we had the financial crisis in 2008. Also, we had the recent pandemic. The common theme through these struggles is that TD Bank is resilient.
During the last five years, revenue at TD increased 13% and net income increased 55% to $17 billion. We cannot say that TD has really felt the struggle that so many have felt during the pandemic. Likewise, the 2008 financial crisis was also relatively easily managed by TD Bank.
This is what you get for being a leading $161 billion bank. By extension, this is what we investors get by buying blue-chip stocks — resiliency, long-term value creation, and steady capital appreciation.
