Canadian Blue-Chip Stocks: The Best of the Best for July

These Canadian blue-chip stocks are backed by strong fundamentals, enabling them to generate steady capital gains and dividend income.

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Blue-chip stocks offer stability, steady capital gains and, in most cases, dependable dividend income. These Canadian stocks belong to companies with well-established businesses, strong fundamentals, and a growing earnings base. These attributes make blue-chip stocks a compelling investment to generate steady passive income and grow investments over time.

With this background, here are three of the best Canadian blue-chip stocks investors could consider for July.

Stock #1

Alimentation Couche-Tard (TSX: ATD) is an appealing option for investors looking for blue-chip stocks. It offers a blend of stability, high growth potential, and consistent income. This leading convenience store operator is known for consistently generating solid growth and delivering above-average returns.

It is worth noting that Couche-Tard’s revenues grew at a compound annual growth rate (CAGR) of 7.3%, while its earnings have increased 18.8% in the past decade. Thanks to its strong financials, ATD has gained more than 466% in the last 10 years. During the same period, the retailer increased its dividend at a CAGR of 26.6%.

Looking ahead, Couche-Tard is likely to benefit from its extensive store base, value pricing strategy, and focus on improving operational efficiencies. Further, the global convenience store operator’s strategic acquisitions will expand its footprint, drive traffic, and support its financials. Also, its focus on increasing the penetration of private-label brands in its sales mix augurs well for long-term growth.

Stock #2

With a market cap of around $105 billion, Canadian Natural Resources (TSX:CNQ) is another attractive blue-chip stock investors could consider. The 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 support its profitability.

Thanks to these solid fundamentals, shares of this leading oil and natural gas producer have risen at a CAGR of 30% over the past five years. Overall, it generated a capital gain of over 272% during the same period. Besides capital gains, this energy company has enhanced its shareholders’ returns through higher dividend payments. Canadian Natural Resources has uninterruptedly raised its dividend for 24 years, reflecting an impressive CAGR of 21% during the same period. 

Looking ahead, the company’s diversified revenue base, solid fundamentals, and ability to increase production bode well for growth. Additionally, its solid balance sheet equips it to pursue expansion opportunities, accelerate its growth rate, and reward its shareholders via higher dividend payments. 

Stock #3

Investors eying blue-chip stocks can rely on leading Canadian banks. One of them is Bank of Montreal (TSX:BMO), which is famous for consistently growing its earnings. In addition to delivering profitable growth, Bank of Montreal stands out among its peers, thanks to its dividend payment history – the longest among the Big Six banks.

It’s worth noting that Bank of Montreal has been paying dividends for over 195 years. Moreover, it has increased its dividend at a mid-single-digit rate over the past decade.

The financial services giant’s diversified revenue sources, high-quality loan portfolio, solid deposit base, and steady credit performance reflect that it is well-positioned to deliver profitable growth in the upcoming years. Overall, its ability to grow earnings, focus on improving operating efficiency, and commitment to rewarding its shareholders bodes well for future growth, driving its share price.

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. The Motley Fool has a disclosure policy.

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