Canadian Blue-Chip Stocks: The Best of the Best for November 2023

Blue-chip stocks like these two top Canadian bank stocks might be the best way to capitalize on the stock market turnaround, which is hopefully around the corner.

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It has been a tough few months for stock market investors in Canada. For many, the environment has been challenging for over a year now. As of this writing, the S&P/TSX Composite Index is down by 4.88% from its 52-week high. The Canadian benchmark index has reached this point after a roller coaster of a year in 2023.

While we have no idea when conditions will improve, the cyclical nature of stock markets virtually guarantees that they eventually will. The stock of well-established and fundamentally strong businesses is better suited to riding these waves and emerging stronger when the dust settles. To this end, there is no shortage of blue-chip stocks you can add to your self-directed portfolio on the TSX.

Sooner or later, the market goes up. It is a fact that we have seen for well over a hundred years. If you are looking for long-term protection for your self-directed portfolio through these market cycles, blue-chip stocks are the ones to buy and hold.

While the TSX offers plenty of them, Canada’s top banking stocks make the strongest pick among blue-chip stocks. Today, we will look at two of the best in the business.

Royal Bank of Canada

Royal Bank of Canada (TSX:RY) is the top Canadian banking stock. Headquartered in Toronto, the $161.34 billion market capitalization bank is the largest among the Big Six Canadian banks. Canadian bank stocks offer the most value. Being more reputably stable than American counterparts, Canadian bank stocks have been around for over a century and delivered stellar long-term returns.

As of this writing, RY stock trades for $116.05 per share, down by 17.21% from its 52-week high. Its performance can be attributed to macroeconomic factors weighing down the entire economy. While higher interest rates can improve revenues through interest income, a prolonged period of higher interest rates can lead the economy into a recession.

Granted, it means more uncertainty in the near term. Still, RY stock is well positioned to post a strong recovery in the aftermath of any recession that might hit the markets soon.

Toronto-Dominion Bank

Toronto-Dominion Bank (TSX:TD) might not be the largest among the Big Six Canadian bank stocks, but it is by no means a stock to shrug aside. The Toronto-based $145.88 billion market capitalization stock can be a great pick for long-term capital gains and dividend income.

Generating over half of its revenue through domestic operations, TD Bank makes 35% of its income from our neighbours south of the border. The rest of it comes through other international operations.

Its diversification into several international markets sets it up for substantial long-term growth. While its investment in the U.S., like its Charles Schwab investment, might lead to volatility and further downturns in the near term, the bank is setting itself up for stellar growth in the future.

As of this writing, it trades for $80.98 per share, down by 13.89% from its 52-week high. It can be an excellent stock to hold for capital gains and long-term dividend income.

  • We just revealed five stocks as “best buys” this month … join Stock Advisor Canada to find out if Toronto-Dominion Bank made the list!

Foolish takeaway

When investors buy stocks, it is important to consider whether they would be happy to hold onto the shares for a long time. Investing with a longer investment horizon reduces the degree of risk to your capital.

Over the short term, several stocks can immediately influence stocks. For a truly successful investor, a good investment is an asset that keeps providing stable wealth growth for the long run.

To this end, you cannot go wrong with Royal Bank of Canada stock and Toronto-Dominion Bank stock. If I were to bet on just one of the two, I would pick Royal Bank of Canada stock for its more solid position in the Canadian banking sector.

However, both bank stocks have proven themselves excellent long-term buy-and-hold assets for investors for well over a century.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Adam Othman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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