Savvy investors know that to build a safe and reliable investment portfolio that you have confidence in holding for the long term, it’s essential to diversify your holdings well. In addition to growth, value, and dividend stocks, you’ll also want to buy stocks of all sizes, from small-cap stocks to large blue-chip stocks that every Canadian should own.
Blue-chip stocks are large, well-established, and financially sound companies with a history of reliable performance. Because of their size, dominance in their respective industries, and consistent track record of profitability, these stocks are often seen as some of the most reliable companies you own, particularly through worsening economic environments.
These are some of the best stocks to add to your portfolio today. Not only can they help add defence and resiliency to your portfolio in the short term, but these are also high-quality stocks you can plan to own for the long haul.
So, if you’re looking to shore up your portfolio today, here are three of the best blue-chip stocks on the TSX that every Canadian should own.
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A top energy infrastructure stock
One of the largest companies in Canada and one of the best blue-chip stocks that every Canadian should own is Enbridge (TSX:ENB), the massive energy infrastructure stock.
Enbridge is a quintessential blue-chip stock. It’s a massive company with a market cap just shy of $100 billion. It’s well established with an extremely well-diversified portfolio of operations as well as assets located all over North America.
In fact, Enbridge transports roughly 30% of all the crude oil produced in North America and roughly 20% of all the natural gas consumed in the U.S., and those are just two of its segments.
Thirdly, Enbridge is consistently profitable and grows the cash flow it generates annually. That’s why it’s such an impressive dividend stock. The stock is significantly defensive, and its operations are so essential that it can continue to earn strong free cash flow even in worsening economic environments.
In fact, Enbridge has increased its dividend for 27 consecutive years, and today it offers a yield of more than 7.2%. Plus, according to Enbridge’s guidance, that dividend is expected to have a payout ratio no higher than 68% of its distributable cash flow this year.
If you’re looking for a safe and reliable investment you can buy now and hold for years or even decades to come, Enbridge is easily one of the best blue-chip stocks on the TSX that every Canadian should own.
Two of the best Canadian blue-chip stocks
In addition to Enbridge, two more high-quality blue chip stocks that every Canadian should own are BCE (TSX:BCE) and Thomson Reuters (TSX:TRI): two stocks worth $51 billion and $79 billion, respectively.
BCE is more focused on telecommunications and broadcasting, whereas Thomson Reuters provides specialized information and tools for various professional sectors. Both of these companies are highly defensive, though.
With BCE, its range of broadband communications services is essential and should see very little impact from a recession. And in Thomson Reuters’s case, it offers tools and solutions for professionals in the legal, tax & accounting, finance, risk & compliance, and media sectors. Furthermore, over 80% of its revenue is recurring, which helps to make it highly recession resistant.
One of the biggest differences between the two blue-chip Canadian stocks, though, is the dividend they provide. For example, right now, BCE stock is currently yielding around 6.8%, while Thomson Reuters has a current yield of roughly 1.5%.
So, BCE is certainly a better stock for investors looking to boost their passive income, whereas Thomson Reuters is a better investment for growth. Since Thomson Reuters pays out a much smaller dividend, it keeps more cash to invest in expanding its operations.
And over the last 10 years, while BCE has grown investors’ capital at a compounded annual growth rate (CAGR) of 8.7%, an impressive rate, Thomson Reuters has grown investors’ capital at a CAGR of more than 20%. That’s unbelievable growth for such a large company already.
So, if you’re looking to add a blue-chip stock or two to your portfolio, there’s no question that both BCE and Thomson Reuters are two of the best that Canadians can buy.
