Trying to predict exactly when the next market rally will begin is usually a losing game. The reality is that by the time investors feel confident that the worst is behind us, many of the best stocks have already started moving higher. That’s why high-quality Canadian blue-chip stocks are some of the best to buy anytime they trade undervalued.
Because if you wait until the entire market starts to recover, you’ll often miss out. That’s why so many investors have learned it’s better to focus less on timing the market and more on owning high-quality businesses that can continue growing regardless of what happens over the next few months.
So, with that in mind, if you’ve got cash on the sidelines that you’re looking to put to work, two undervalued Canadian blue-chip stocks I’d be looking to add now, before a significant market rally, are Brookfield Asset Management (TSX: BAM) and BCE (TSX: BCE).
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A blue-chip built for long-term growth
If you’re an investor that wants to earn a solid dividend, but is still expecting more long-term growth potential from a blue-chip, then Brookfield Asset Management is easily the top choice to consider today.
Brookfield is one of those businesses that seems to benefit from almost every major long-term investing trend. The company manages billions of dollars across infrastructure, renewable energy, private credit, real estate, and other alternative assets.
And as institutional investors continue looking for ways to diversify beyond traditional stocks and bonds, demand for those assets continues to grow. That’s what makes Brookfield so attractive.
Furthermore, the business model is highly scalable because as more capital flows onto its platform, Brookfield earns more fee-related revenue without needing to increase its costs at the same pace, which helps create a powerful compounding effect over time.
It’s also one of the reasons Brookfield has become a favourite among long-term investors. The company isn’t dependent on any single industry or economic trend. Instead, it benefits from growth across multiple sectors and geographies.
And even though the stock has performed well over the last several years, it still appears to have a long runway ahead as alternative assets continue gaining popularity around the world.
Furthermore, the stock currently trades roughly 25% down from its 52-week high, and its dividend yield has climbed to roughly 4.2% during that decline, making it one of the best blue-chip stocks to buy now before the next market rally.
A high-quality telecom stock that’s ideal for income investors
While Brookfield offers an attractive dividend and can certainly be owned by passive income seekers, BCE and its current 5.4% yield is another high-quality Canadian blue-chip stock to buy for consistent passive income.
And while it was forced to trim its dividend last year after spending heavily to build out its 5G and fibre infrastructure, that reset has allowed BCE to operate from a much healthier position going forward.
The payout is far more sustainable, and management now has greater financial flexibility moving forward, and the majority of its significant infrastructure spending is now behind it.
Meanwhile, BCE still owns one of the most important communications networks in Canada. Millions of Canadians rely on its wireless, internet, and data services every day, creating recurring revenue that doesn’t simply disappear because of short-term economic uncertainty.
The company also continues investing in areas such as enterprise solutions, data centres, and AI-related infrastructure, providing potential growth opportunities alongside its core operations.
So, while BCE continues to offer an attractive yield and trades at a forward enterprise value-to-earnings before interest, taxes, depreciation and amortization (EV/EBITDA) ratio of roughly 6.9 times, below its 5- and 10-year averages of 7.9 times and 8.1 times, respectively, it’s one of the best Canadian blue-chip stocks to buy ahead of the next market rally.
