3 Blue Chip Stocks So Safe That Canadians Can Hold Them Until They Die

These Canadian blue-chip stocks are fundamentally strong, relatively safe, and can generate steady returns in the long term.

Investors seeking stability and relatively steady returns in the long run could consider investing in Canadian blue-chip stocks. These stocks comprise well-established companies with solid fundamentals that enable them to weather any market downturn and generate notable returns in the long term.

Given their history of delivering profitable growth, these companies also enhance shareholders’ returns through regular dividend payments and share buybacks. However, investors should understand that blue-chip stocks also carry risks despite offering stability.

With this background, let’s discuss three safe blue-chip stocks every Canadian should hold to earn capital gains and dividend income until they die.

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Loblaw

Speaking of top blue-chip Canadian stocks, investors could consider adding shares of Loblaw (TSX: L) to their portfolio. Loblaw is the largest food and pharmacy retailer in Canada. Thanks to its recession-resilient business model, this retailer consistently generates steady earnings and free cash flows. Further, its defensive business model keeps Loblaw stock relatively immune to wild market swings.

While Loblaw operates a low-risk and defensive business, its stock has delivered above-average returns in the past. For instance, Loblaw stock has increased at a compound annual growth rate (CAGR) of more than 20% in the past five years, generating capital gains of over 151%. 

Beyond lucrative capital gains, Loblaw has consistently enhanced its shareholders’ returns through higher dividend payments and share repurchases.

In the future, Loblaw’s discount stores, wide product range, and price freezes position it well to consistently increase traffic at its stores and deliver solid same-store sales growth. Moreover, the grocery retailer’s efforts to grow and optimize its retail network and increase the mix of private-label food products will likely support sales and profit margins.

In summary, its low-risk business, solid growth, and focus on enhancing dividends make Loblaw a solid blue-chip stock offering stability, growth, and income.

Bank of Montreal

Investors planning to invest in top blue-chip stocks could consider leading Canadian banks. Within the banking sector, Bank of Montreal (TSX: BMO) is a dependable bet. This leading Canadian bank is known for growing earnings in all market conditions and enhancing shareholders’ value through regular dividend payments. What stands out is that the Bank of Montreal has the longest dividend payment history among all Canadian companies (about 195 years).

The financial services giant is well-positioned to deliver profitable growth in the upcoming years, which will drive its share price and dividend payouts.

Bank of Montreal’s diversified revenue sources, high-quality loan portfolio, solid deposit base, and steady credit performance support its top and bottom-line growth. In addition, its focus on improving operating efficiency cushions its earnings and supports dividend payments. Further, the stock offers a compelling yield of 5.2% (based on its closing price of $119.76 on June 4). 

Canadian National Railway 

Shares of Canadian National Railway (TSX: CNR) are another top blue-chip stock that investors can hold for the long term. It owns and operates a transportation business and provides shipping through rail. Canadian National Railway plays a crucial role in the economy as a provider of transportation services, which adds an extra layer of stability to its overall performance.

While Canadian National Railway operates a defensive business, its stock has grown at a CAGR of nearly 12% in the past decade. Besides offering stability and decent capital gains, Canadian National Railway has consistently enhanced its shareholders’ returns by increasing its dividend at a CAGR of about 14% since listing on the stock exchange in 1995. 

Overall, Canadian National Railway’s low-risk and defensive business model, well-diversified portfolio, and focus on improving operating efficiency position it well to grow its revenue and earnings in all market conditions. Moreover, the transportation giant will likely enhance its shareholders’ returns through uninterrupted dividend payments.

Fool contributor Sneha Nahata has no position in any of the stocks mentioned. The Motley Fool recommends Canadian National Railway. The Motley Fool has a disclosure policy.

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