Finding the right blue-chip stocks to own for the long term is a key focus of many investors. Indeed, companies that have been around for a very long time and nestled into strong market positions in their respective industries can provide the kind of defensive exposure many are after right now. With high pricing power and strong brands, these companies can continue to provide capital appreciation and dividend income to long-term investors. That’s the name of the game for most.
On the TSX, these are three of the best blue-chip stocks I think investors may want to consider right now. Each of these companies is a dominant player in their respective industries and appears to have strong growth prospects moving forward.
Let’s dive in!
Royal Bank of Canada
In the financial services sector, Royal Bank of Canada (TSX: RY) is Canada’s largest bank. The company’s status as the leading blue-chip Canadian stock can’t be overlooked. In many respects, Royal Bank’s price movements affect the broader market. So, even if you’re not a stock picker, this is a stock that’s going to disproportionately affect the index funds you’re passively invested in.
Now, there are plenty of reasons why Royal Bank remains the top stock in the Canadian market. The banking sector is highly concentrated in Canada, with Royal Bank holding significant market share. Additionally, the company is a top global bank as well, operating in a range of global markets as a systemically important bank.
In other words, Royal Bank is essentially too big to fail. Even in times of dire global economic turmoil, this is a bank that should remain a key player. Accordingly, investors looking to Canadian banks as defensive stocks may want to give this company a closer look than many of its peers.
On the dividend front, Royal Bank has paid out distributions for more than 150 years. That’s hard to come by in today’s market, and makes this top stock one to consider.
Restaurant Brands
Popeyes Louisiana Kitchen, Tim Hortons, and Burger King are just a few of the well-known quick-service restaurant brands owned by Restaurant Brands (TSX: QSR), a multinational corporation. Restaurant Brands has a strong presence in more than 100 countries, enjoying the advantages of a varied clientele and a tried-and-true business plan.
By concentrating on franchising, the business reduces its operating expenses and produces steady cash flow. Furthermore, QSR’s steady expansion has been aided by its well-known brand and capacity to adjust to shifting consumer demands.
Given the cyclical nature of the restaurant business and the competition it confronts from both established and up-and-coming businesses, Restaurant Brands’s stable of well-known brands makes it a comparatively safe investment. Furthermore, if consumers increasingly trade down to lower-priced dining options outside of the home, this is a company that could disproportionately benefit in a market downturn.
Fortis
Utilities giant Fortis (TSX: FTS) is a top regulated gas and electricity player long-term investors may want to consider. In terms of providing steady and increasing passive income over time, Fortis has proven itself as a top option to consider. The company’s five-decade-long track record of hiking dividends has continued to buoy its stock, which is now trading around its all-time high.
With a current dividend yield of 4%, Fortis remains a top bond proxy that long-term investors may certainly want to consider, particularly as bond yields continue to come down in the Canadian market. If the Bank of Canada continues to cut rates, defensive companies like utility players could see continued demand from investors. Indeed, I think the stock’s recent uptick is still in its early innings. We’ll have to see, but Fortis certainly seems well-positioned to ride many of the macro trends we’re seeing in the market to new highs.
