Blue-chip stocks stand out for their stability, dependability, and steady returns in the volatile world of finance. Companies that can provide such defensive exposure as times get tough may come in higher demand, particularly as a number of geopolitical risks pick up in this market.
The following three blue-chip stocks are ones I’d certainly consider value picks right now, at least relative to the more aggressive picks that many typically focus on.
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Fortis
A well-known utility firm in North America, Fortis (TSX: FTS) has long been a favourite of Canadian investors looking for steady dividend growth. Fortis has a long history of increasing dividends and has shown to be an exceptional cash flow generator with a varied portfolio of regulated power, gas, and water assets.
One of the key factors contributing to Fortis’s stability is its regulated business model. The rates it charges for its services are typically regulated by government agencies, providing a degree of protection against market fluctuations. This regulatory framework also ensures a steady stream of revenue, allowing Fortis to invest in infrastructure upgrades and expand its operations.
Fortis is dedicated to a low-risk business strategy; regulated utility assets account for more than 99% of its revenue. This offers a steady stream of income, which is essential for dividend security as well as capital growth. Fortis has a goal to invest CAD 25 billion by 2028, with an emphasis on renewable energy, and is well-positioned to continue providing value to its shareholders for many more years.
Royal Bank of Canada
One such blue-chip company that has endured the test of time is Royal Bank of Canada (TSX: RY), which is among the biggest banks on the continent. RY has constantly provided value to its stockholders thanks to its strong market position, diverse business strategy, and sound financial base.
RY’s business model is broad and includes retail banking, wealth management, capital markets, and insurance. This helps the company withstand difficult economic times. The bank can secure a substantial portion of the Canadian banking industry because of its strong market position and wide branch network, which guarantees a consistent flow of income.
Moreover, strong financial management and varied activities are the foundations of RY’s stability. Over the past 10 years, the bank has regularly increased dividends, with an average annual rise of 6–7%. As the bank’s dividend payout ratio is typically conservative, it allows it to maintain a healthy dividend yield while retaining capital for future growth.
Alimentation Couche-Tard
A prominent player in the convenience store and gas station sectors worldwide, Alimentation Couche-Tard (TSX: ATD) is renowned for its audacious yet fruitful growth plan. With more than 14,000 locations throughout the globe, including those under the Circle K name, Couche-Tard makes money from several different sources, such as the sale of fuel, in-store goods, and food services.
The two main pillars of ATD’s growth strategy are organic growth and acquisitions. With a track record of successfully locating and acquiring premium convenience store chains, the firm has been able to quickly establish itself in new regions. ATD has seen substantial sales and profit growth as a result of this growth strategy, making it a desirable investment for investors hoping to gain wealth.
Despite having a lower dividend yield than FTS and RY, Alimentation Couche-Tard has a high potential for capital growth. Because of its strong cash flow, the business is able to consistently reinvest in its operations, which spurs further growth.
