Investors looking for steady returns and stability could consider investing in Canadian blue-chip stocks. These stocks are backed by companies with solid fundamentals, well-established businesses, and a growing earnings base that enables them to consistently outperform the broader markets and enhance their shareholders’ value via dividend distributions and share repurchases.
Against this background, let’s look into three blue-chip stocks that, in my opinion, every Canadian should own.
Canadian Natural Resources
Canadian Natural Resources (TSX: CNQ) is one of the top Canadian stocks for investors to generate steady capital gains and earn a worry-free passive income. Shares of this oil and gas company have gained about 226% in the last five years, reflecting a compound annual growth rate (CAGR) of about 27%.
Furthermore, Canadian Natural Resources has consistently enhanced its shareholders’ returns through higher dividend payments. Canadian Natural Resources has raised its dividend for 24 consecutive years. Further, it offers a yield of over 4.7%, which is near the current market price.
Canadian Natural Resources’s diversified and long-life assets, high-value reserves, solid financial position, and low debt-to-adjusted funds flow ratio position it well to generate strong financials. Moreover, its focus on cost control supports its earnings and dividend distributions.
Alimentation Couche-Tard
Shares of the convenience store operator Alimentation Couche-Tard (TSX: ATD) could be a solid addition to your investment portfolio. Alimentation Couche-Tard offers a compelling combination of stability, high growth, and income. It is worth noting that despite its low-risk business, Couche-Tard stock has grown over 138% in the past five years, outperforming the broader equity market by a significant margin.
Further, ATD has consistently repurchased shares and increased dividend payments, boosting its shareholders’ value.
It’s worth noting that the stock’s outperformance and solid dividend reflect its ability to grow its revenue and earnings rapidly and in all market conditions. For instance, Couche-Tard’s revenue sports a 10-year CAGR of 7.3%. During the same period, its earnings grew at a CAGR of 18.8%.
Looking ahead, Alimentation Couche-Tard’s focus on value pricing, extensive store base, and cost-saving measures will drive solid organic growth. Moreover, its focus on accretive acquisitions will likely expand its footprint and accelerate its growth rate.
Loblaw
Loblaw (TSX: L) is the final blue-chip stock on this list. It is Canada’s largest food and pharmacy retailer and operates a low-risk and defensive business. Thanks to its defensive business model, Loblaw stock remains less volatile and adds stability to your portfolio regardless of the economic situation. What stands out is that Loblaw stock has grown at a CAGR of about 18% in the past five years, generating a total return of nearly 129% during that period.
The company’s business remains resilient even amid an economic downturn thanks to its discount stores, wide product offerings, and inflation-fighting price freeze. Furthermore, Loblaw’s focus on optimizing its retail network and increasing the penetration of private-label food products drive traffic and support its margins.
Loblaw has delivered above-average capital gains. Further, it enhanced its shareholders’ returns through consistent share buybacks and dividend payouts. With its low-risk business and solid growth, Loblaw is a solid long-term stock that can generate steady returns.
