Investors looking for stability, consistent growth, and income could consider investing in blue-chip stocks listed on the TSX. These Canadian stocks are backed by companies with solid fundamentals and well-established businesses that enable them to withstand market volatility and generate solid returns in the long term. In addition, these stocks often offer steady dividend income, as these companies are profitable and have a growing earnings base.
Against this background, here are three blue-chip stocks that, in my opinion, every Canadian should own.
Stock #1
Alimentation Couche-Tard (TSX: ATD) is an attractive blue-chip stock offering stability, growth and income. This leading Canadian convenience store operator is known for consistently delivering robust financials and above-average returns.
It is worth noting that Couche-Tard’s revenues grew at a compound annual growth rate (CAGR) of 6.2%, while its adjusted earnings per share (EPS) increased at a CAGR of 15.2% in the past decade. Thanks to its strong financials, ATD has gained more than 464% in the last 10 years, delivering an average annualized return of about 19%. During the same period, the retailer increased its dividend per share at a CAGR of 25.6%, supported by its strong earnings and free cash flows.
Looking ahead, Couche-Tard is likely to benefit from its extensive store base, value pricing strategy, and focus on improving operational efficiencies. Further, the company’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 margin expansion and long-term growth.
Stock #2
Canadian National Railway (TSX:CNR) operates an extensive rail network and provides critical shipping services across North America. As an essential service provider, Canadian National Railway’s financial performance remains relatively resilient, offering investors stability and decent capital gains. Over the past decade, the stock has grown at a CAGR of 9.7%, resulting in capital gains of over 153%.
Canadian National Railway has also enhanced its shareholders’ value through consistent dividend growth and share repurchases. Thanks to its resilient and growing earnings base, the comapny increased its dividend at a CAGR of 15% since its first payment in 1996. Further, it has repurchased nearly $35 billion in shares since 2000, reflecting its commitment to reward its shareholders.
Looking ahead, the transportation leader targets its EPS to grow at a CAGR of 10-15% through 2026, supporting higher dividend growth. Canadian National Railway’s defensive business model and well-diversified portfolio will likely bolster its profitability. Further, the company’s focus on expanding its network through acquisitions, operational efficiency, and a strong balance sheet will likely offer financial flexibility, support future growth, and enable it to deliver steady capital gains.
Stock #3
Another attractive blue-chip stock investors could consider is Canadian Natural Resources (TSX:CNQ). The leading oil and natural gas producer has delivered exceptional returns and consistent dividend income, backed by solid fundamentals, diversified cash flows, high-value reserves, and long-life assets. Further, its low maintenance capital requirement and focus on lowering operating costs drive its earnings and support its share price.
Thanks to its ability to generate strong financials, its shares have risen at a CAGR of over 30% in the past five years. 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. Moreover, it offers a healthy yield of 4.6% based on the last closing price.
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.
