3 Blue-Chip Stocks Every Canadian Should Own

Planning for a long-term investment? Blue-chip stocks emerge as a top choice. And these three stand out as the top picks.

| More on:

Image source: Getty Images

Investors seeking relatively steady returns in the long term could consider investing in Canadian blue-chip stocks. These are shares of companies with well-established businesses and strong fundamentals. As these companies consistently generate strong earnings, they enhance shareholders’ returns through regular dividend payments and share buybacks. 

With this background, let’s zoom in on three blue-chip stocks that, in my view, every Canadian should own. 

Canadian Natural Resources

With a market cap of around $111 billion, Canadian Natural Resources (TSX:CNQ) is a compelling Canadian stock for long-term investors. Shares of this leading oil and natural gas producer have risen about 276% in five years. This reflects an average annualized growth rate or CAGR of more than 30%, much higher than the broader market average. 

While the company has comfortably outperformed the broader markets, it has enhanced its shareholders’ returns through higher dividend payments. Canadian Natural Resources has raised its dividend for 24 consecutive years. Further, its dividend grew at an impressive CAGR of 21% during the same period. 

The oil and gas company’s highly diversified cash flows, high-value reserves, and long-life assets position it well to generate strong financials regardless of the commodity cycle. Further, its low maintenance capital requirement and focus on lowering operating costs augur well for long-term profitability. Additionally, its solid balance sheet equips it to pursue expansion opportunities, deliver strong growth, and return higher cash to its shareholders. 

Alimentation Couche-Tard 

Shares of the convenience store operator Alimentation Couche-Tard (TSX:ATD) could be a solid addition for investors looking for blue-chip stocks offering stability, high growth, and income. This retailer has been growing its revenue and earnings at a solid pace for years. For instance, Alimentation Couche-Tard’s top and bottom lines have grown at a CAGR of 7.3% and 18.8%, respectively, in the past decade. 

Thanks to its strong financials, ATD has gained more than 449% in the last 10 years. During the same period, it increased its dividend at a CAGR of 26.6%. 

Looking ahead, this large-cap company is likely to benefit from its extensive store base. Further, Alimentation Couche-Tard’s expansion of private label brands, value pricing strategy, and focus on improving operational efficiencies will likely drive its revenue and profitability in the long term. Also, the convenience store operator will likely benefit from its strategic acquisitions, which will expand its footprint, drive traffic, and support its financials and share price. 

Constellation Software 

Investors could consider investing in shares of Constellation Software (TSX:CSU), which provides software and services to the public and private sectors. It acquires, manages, and builds industry-specific software businesses that provide specialized solutions. 

Thanks to its broad portfolio of software businesses, focus on strategic acquisitions, and a large customer base spread across 100 countries, Constellation Software delivers strong financials, which support its share price and enable the company to return cash to its shareholders. 

Notably, Constellation Software stock has risen about 269% in five years. The company’s focus on small and mid-sized vertical market software (VMS) acquisitions will likely drive its financials in the coming years and support the uptrend in its share price. The company is also building a new team to pursue large VMS acquisitions, which augurs well for long-term growth. 

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 Sneha Nahata has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alimentation Couche-Tard. The Motley Fool recommends Canadian Natural Resources and Constellation Software. The Motley Fool has a disclosure policy..

More on Investing

A worker gives a business presentation.
Dividend Stocks

TSX Communications in April 2024: The Best Stocks to Buy Right Now

Here are two of the best TSX communication stocks you can buy in April 2024 and hold for years to…

Read more »

Man holding magnifying glass over a document
Tech Stocks

Watching This 1 Key Metric Could Help You Beat the Stock Market

One key metric that Buffett looks at is the return on equity. Here's why you should watch it.

Read more »

Man considering whether to sell or buy
Dividend Stocks

Royal Bank of Canada Stock: Buy, Sell, or Hold?

Royal Bank of Canada (TSX:RY) has a high dividend yield. Should you buy it?

Read more »

oil tank at night
Energy Stocks

Is Suncor a Buy, Sell, or Hold?

Suncor Energy stock is off to a strong start in 2024. Is the TSX energy stock a good buy right…

Read more »

Daffodils in bloom
Tech Stocks

2 Best “Magnificent Seven” Stocks to Buy in April

Two surging mega-cap tech stocks are the best buys among the “Magnificent Seven” this April.

Read more »

A golden egg in a nest
Stocks for Beginners

Got $5,000? 5 Stocks to Buy for Lasting Wealth

Got $5,000 to build a long-term compounding stock portfolio? Here are five top Canadian stocks to building lasting lifetime wealth.

Read more »

Businessman looking at a red arrow crashing through the floor
Dividend Stocks

BCE’s Stock Price Has Fallen to its 10-Year Low of $44: How Low Can it Go?

BCE stock price has dipped 39% in two years and shows no signs of growth in the next few months.…

Read more »

Dollar symbol and Canadian flag on keyboard
Dividend Stocks

Invest $10,000 in This Dividend Stock for $3,974.80 in Passive Income

This dividend stock gives you far more passive income than just from dividends alone, so consider it if you want…

Read more »