The blue chips are some of the best stocks to own as a beginner investor who’s looking to play it on the safe side. Of course, not all blue-chip stocks are immune from severe volatility, especially when a bear market has a chance to rear its ugly head.
In any case, I believe that some of the best-in-class blue chips are able to offer safety in size as they look to benefit from economies of scale. Being able to use your size to your advantage can be a huge benefit in the world of business. And the following names, I think, are great buys today, even as the recent wave of negative momentum looks to continue over the coming weeks and months.
Without further ado, let’s check out two Canadian blue chips that likely deserve the attention of prudent investors seeking to maximize value.
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BCE
BCE (TSX: BCE) stock can’t seem to catch a break, with shares recently sinking right back to multi-year lows of around $50 and change per share. Undoubtedly, the latest spill comes amid a pretty turbulent time in the company’s history. The firm recently conducted mass layoffs (affecting around 4,800 positions), a move that’s caused some cautious investors to second-guess their decision to own the telecom giant. Indeed, the firm’s position with regulators certainly could be better.
The main attraction isn’t the media business, though, at least in my humble opinion. It’s the telecom business that’s helped keep the incredible 7.8% dividend yield on somewhat steady footing. Of course, cash flows aren’t where they need to be, but I don’t think you can fault the company as it navigates brutal macro headwinds. If BCE can balance its huge dividend commitment alongside infrastructure investments, I think the stock could have a pathway higher.
Undoubtedly, if you seek a big yield at a low cost, BCE is a blue chip that deserves a spot on your TFSA or RRSP watchlist. While there’s some baggage with the name, I still view BCE as battered enough that most income-focused investors ought to consider holding their noses and picking up a few shares. Sure, BCE may not be the same sleep-easy stock after its brutal downturn. Shares may look risky at these depths, but they’re actually less risky than they were just a few years ago, when the name was a dividend darling for income seekers.
However, over the long run, I see a path out of the funk. And to make the most of a potential turnaround, investors will need to get in while most others are rushing to get out. At just north of $50 per share, BCE stands out as one of the market’s better dividend bargains. Yes, the headlines stink right now, but the valuation, I believe, couldn’t be more attractive for those with an investment horizon beyond five years.
TC Energy
TC Energy (TSX: TRP) is another Canadian dividend titan that doesn’t get as much respect from investors these days. Like BCE, shares of TRP have a huge dividend yield (currently at 7.15%). Though the stock has been on a nice upward run since October 2023 (the same can’t be said for BCE), the stock remains quite cheap given its dividend-growth prospects and impressive cash flow generation.
The stock recently got a price target bump from two big Canadian banks, and for good reason: the latest quarterly results were really good, perhaps better than the post-earnings reaction may have suggested. Either way, I think TC Energy is back on track to inch higher again. As rates fall and the firm continues to seize opportunities at hand, the 19.5 times trailing price-to-earnings multiple makes TRP look like an absolute bargain hiding in plain sight.
