Canadian blue-chip stocks are a solid option to build a resilient and diversified investment portfolio. These are well-established companies with fundamentally strong businesses and the ability to grow profitably. These large-cap stocks are poised to provide steady capital gains and generate consistent dividend income. Thus, investing in blue-chip stocks through a TFSA (Tax-Free Savings Account) can help enhance your overall returns as your returns will not be taxed.
With this background, here are four blue-chip stocks to buy and hold forever in a TFSA.
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Blue-chip stock #1
Canadian investors seeking exposure to blue-chip stocks could consider Brookfield Asset Management (TSX: BAM). The asset management company has a diverse portfolio and generates solid returns. Moreover, it distributes a significant portion of its earnings to enhance its shareholder value through dividends.
Brookfield Asset Management is poised for multi-year growth led by its investments in high-growth sectors such as artificial intelligence (AI) infrastructure, energy, and nuclear power. The company’s asset-light model, focus on high-quality investments, consolidation of credit division, and growing fee-bearing capital augur well for growth.
Brookfield Asset Management sees double-digit earnings growth over the next five years and plans to double its business, which will support its share price. Moreover, its growing fee-related income positions it well to generate steady capital gains and distribute higher dividends.
Blue-chip stock #2
Investors seeking blue-chip stocks could consider leading Canadian banks. Among the top financial institutions, Royal Bank of Canada (TSX: RY) is a dependable stock for its durable earnings growth rate and its focus on rewarding its shareholders with higher dividend payments.
Canada’s largest bank benefits from its highly diversified client base, disciplined cost management, and sustained earnings. Further, its growing loan portfolio, solid deposits, improving efficiency ratio, and robust balance sheet suggest it is well-positioned for future growth.
Royal Bank of Canada stock has gained more than 242% in the past decade, reflecting a compound annual growth rate (CAGR) of over 13%. During this period, it enhanced its shareholder value through consistent dividend growth, generating solid total returns.
Blue-chip stock #3
TFSA investors could consider adding shares of Alimentation Couche-Tard (TSX: ATD) for income, growth, and stability. The company operates convenience stores, supplies fuel, and provides electric vehicle (EV) charging solutions, which enables it to drive steady revenues.
While macro headwinds such as elevated interest rates and high inflation slowed its growth, it is poised to benefit from its value proposition and extensive store presence. Further, its growing portfolio of private-label products will drive top-line and support margins. Additionally, strategic acquisitions and its growing EV fast-charging business will likely deliver significant returns in the coming years.
Alimentation Couche-Tard has raised its dividend at a CAGR of 25.6% over the past decade. Moreover, its growing earnings base suggests that this trend will likely be sustained in the coming years.
Blue-chip stock #4
Loblaw (TSX: L) is a top Canadian blue-chip stock for growth, stability, and income. Canada’s largest food and pharmacy company operates a defensive business and generates higher traffic in all market conditions, supporting its sales and earnings growth rate. Thanks to resilient and growing financials, Loblaw stock has generated significant gains and outperformed the Canadian benchmark index with its returns.
For instance, Loblaw stock has grown at a CAGR of 16.1% in the last 10 years, delivering an impressive overall capital gain of 343.8%. Moreover, the retailer enhanced its investors’ value through share buybacks and regular dividend payments.
Loblaw’s business momentum will likely be sustained. Its value pricing strategy, optimization of its retail network, and growth in its discount store base will drive its same-store sales and earnings. Moreover, its diverse product offerings and expansion of private-label products will support higher sales and margins. Overall, Loblaw is poised to deliver steady capital gains and solid total returns.
