Investing in blue-chip stocks is a popular strategy globally for several reasons. Typically, blue-chip stocks are defined as companies that are market leaders with robust business models and an enviable track record of delivering consistent returns.
These stocks offer an attractive risk/reward profile making them ideal for both new and experienced investors. Further, as blue-chip stocks generate consistent cash flows, a majority of these companies also pay shareholders an attractive dividend, offering stability in periods of economic turbulence.
Here are four quality blue-chip TSX stocks you can consider buying today.
Source: Getty Images
Enbridge stock
An energy infrastructure giant, Enbridge (TSX:ENB), is among the largest companies in Canada. Its wide base of cash-generating assets allows Enbridge to pay shareholders an annual dividend of $3.55 per share, translating to a forward yield of 6.7%.
Enbridge is part of the highly cyclical energy sector but has increased its dividend by 10% annually in the last 28 years, which is quite remarkable. The cash flows of this TSX heavyweight are tied to long-term contracts, making Enbridge almost immune to fluctuations in energy prices.
It continues to invest in capital expenditures and aims to gain traction in the renewable energy space, which will be a key driver of future cash flows for Enbridge.
Brookfield Renewable Partners stock
One of the largest players in the clean energy sector, Brookfield Renewable Partners (TSX:BEP.UN) has already returned 2,000% to shareholders in dividend-adjusted gains since May 2003. Despite these market-thumping gains, BEP stock offers investors a forward yield of 4.4%.
BEP’s development pipeline will allow it to add 110 gigawatts of energy capacity, which is quite significant given its current capacity stands at 25.4 gigawatts. Equipped with an investment-grade balance sheet and more than $4 billion in liquidity, Brookfield Renewable has the flexibility to grow via acquisitions as well as organically.
Sun Life Financial stock
A well-diversified financial services company, Sun Life (TSX:SLF) offers a range of savings, retirement, and pension products to customers. With an annual dividend of $2.88 per share, Sun Life’s dividend yield stands at 4.4%.
Despite a challenging macro-environment, Sun Life increased its net income by 10% to $990 million in the fourth quarter of 2022. Its earnings also grew by 4% to $3.67 billion in the last four quarters.
SLF stock has surged 229% since May 2013 and currently trades at 10 times forward earnings, which is quite cheap. It’s priced at a discount of 12.3% to consensus price target estimates. After accounting for its dividend yield, total returns will be closer to 16%.
Alimentation Couche-Tard stock
Among the top-performing TSX stocks, Alimentation-Couche Tard (TSX:ATD) is the final blue-chip stock on my list. It operates and licenses convenience stores in North America, Europe, and Asia.
ATD stock has returned 600% in the last 10 years and a whopping 5,780% since May 2003, easily outpacing most global indices. Despite these lofty returns, ATD stock is currently priced at 17 times forward earnings, which is quite reasonable.
While Alimentation Couche-Tard has a dividend yield of just 0.8%, its payout ratio is well below 25%, providing the company with enough room to raise the dividend in the future.
