Canadian Blue Chips: The Perfect Hedge Against Surging Interest Rates?

These inflation-beating stocks pay reliable dividends.

| More on:
STACKED COINS DEPICTING MONEY GROWTH

Image source: Getty Images

Since the aftermath of the pandemic, the Canadian stock market has witnessed some impressive growth. Among the financials and commodity-heavy index, so-called blue chips (stocks with large market capitalizations and which are leaders in their sectors) continue to be the focus of many long-term investors.

Generally, the size and scale of a company’s operations can help inform its growth trajectory and provide investors with lower volatility than smaller-cap names. Unfortunately, the growth rates such stocks provide are usually muted, so investors need to make up the difference in their total returns via these companies’ higher-than-average dividend yields.

For those looking for a solid mix of growth and dividends, here are three stocks I think are worth considering. These are three companies from three diverse sectors, providing options for those seeking diversification.

Let’s dive in!

Toronto-Dominion Bank

Toronto-Dominion Bank (TSX:TD) is amongst the leading banks in Canada offering a diverse range of products and services in segments like retail banking, corporate banking, and various other segments. The products and services include typical banking products, insurance products, credit solutions, wealth management, advisory solutions, and more.

Recently, one of its subsidiaries “TD Securities” has announced significant expansion plans. As per sources, the company is looking forward to expanding its investment banking coverage in the United States. Moreover, the company has also declared a dividend of $1.02 per share to its shareholders. Over time, TD’s dividends have consistently grown (outside of periods where they couldn’t raise their distribution), providing excellent total returns for investors.

These corporate actions indicate a high-scale revenue return on investments in the years to come. 

Enbridge

Enbridge Inc. (TSX:ENB) is an integrated energy delivery company. It is engaged in the processing, transmission, and distribution of natural gas. Enbridge is the third-largest supplier of natural gas in North America. It has implemented low-carbon energy technologies such as hydrogen, natural gas (renewable), and others. Accordingly, for those seeking a long-term way to play the energy sector, Enbridge remains a top option (mostly for its juicy 7.7% dividend yield).

Furthermore, as per its recently disclosed financial guidance for 2024, the company’s adjusted EBITDA is expected to increase from $16.6 billion to $17.2 billion. Additionally, Enbridge’s distributable cash flow (DCF) is expected to increase from $5.40 to $5.80 per share. Thus, it appears the company’s dividends are well-covered for now, making this a top-tier yield play for investors looking for a dividend yield exceeding the inflation rate.

Restaurant Brands International

Restaurant Brands International (TSX:QSR) is among the largest chains of quick service restaurants in the globe with more than 30,000 restaurants present in more than 100 countries across the globe. It owns some of the biggest QSR brands such as Burger King, Firehouse Subs, Popeyes, and Tim Hortons.

In its Q3 results, the company reported a 10.9% spike in its system-wide sales and global sales have increased at a rate of 7%. Moreover, the total revenue of the company has grown at a rate of 42.7% compared to its previous year’s third-quarter result.

Over time, I think Restaurant Brands will continue to provide a nice mix of growth and dividends, with a yield that’s hovered around 3% for some time.

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 Chris MacDonald has positions in Enbridge and Restaurant Brands International. The Motley Fool recommends Enbridge and Restaurant Brands International. The Motley Fool has a disclosure policy.

More on Investing

question marks written reminders tickets
Dividend Stocks

Dividend Investors: Is BCE Stock a Buy Now?

BCE now offers a 7.9% dividend yield.

Read more »

A bull outlined against a field
Tech Stocks

Is a Bull Market Here? 4 Reasons to Buy Celestica Stock Like There’s No Tomorrow 

Celestica (TSX:CLS) stock has been a huge winner for investors this year, but there could be even more in the…

Read more »

Retirement plan
Investing

1 Retirement Savings Hack That Has Created Many Millionaires

Investors can retirement with $1 million in savings by investing in index funds such as the S&P 500.

Read more »

edit Taxes CRA
Dividend Stocks

CRA Money: 2 More Days to Boost Your Tax Refund!

Dividend stocks like Toronto-Dominion Bank (TSX:TD) can be great RRSP holdings.

Read more »

close-up photo of investor Warren Buffett
Stocks for Beginners

The Best Warren Buffett Stocks to Buy With $300 Right Now

These Warren Buffett stocks have long histories of growth, each offering their own reasons for why investors need them today.

Read more »

grow money, wealth build
Dividend Stocks

3 TSX Dividend Stocks With Yields Above 7% (But Are They Safe?)

These three dividend stocks all have ultra-high yields, making them some of the best to buy if you're looking to…

Read more »

oil and natural gas
Energy Stocks

3 Energy Stocks Already Worth Your While

TSX energy stocks could shine for much longer. Here's why Canadian Natural Resources (TSX:CNQ), Parex Resources (TSX:PXT), and another oil…

Read more »

Light bulb with jester hat perched on top
Dividend Stocks

3 Canadian Dividend Stocks With Payouts That Are No Joke 

Here are three top Canadian dividend stocks long-term investors would be remiss to ignore, particularly at these current valuations.

Read more »