Improving geopolitical conditions in the Middle East and optimism surrounding the reopening of the Strait of Hormuz have lifted investor sentiment, helping the Canadian equity markets rebound strongly in recent days. As a result, the S&P/TSX Composite Index has gained 14% year to date. Despite this rally, concerns over a slowing global economy, persistent inflationary pressures, and lingering geopolitical risks continue to cloud the outlook.
In this uncertain environment, investors can benefit from owning resilient blue-chip companies. With that in mind, here are three blue-chip stocks that are excellent buys today.
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Fortis
Fortis (TSX:FTS) operates nine regulated electric and natural gas utilities, serving approximately 3.5 million customers across Canada, the United States, and the Caribbean. Given the essential nature of its services and the fact that most of its assets are concentrated in low-risk transmission and distribution operations, the company generates stable, predictable earnings largely insulated from economic and commodity price fluctuations. This resilient business model has helped Fortis deliver an average annual total shareholder return of 10.4% over the past 20 years. The utility has also raised its dividend payouts for the last 52 years and currently offers a forward dividend yield of 3.26%.
Looking ahead, rising demand for electricity and natural gas, driven by economic growth, transportation electrification, and the rapid expansion of AI-ready data centres, provides a favourable backdrop for Fortis. To capitalize on these trends, the company is investing $28.8 billion over five years to expand its regulated asset base, with its rate base expected to grow at 7% annually to $57.9 billion by 2030. Supported by these investments, management expects to increase the dividend by 4% to 6% annually through the end of the decade, making Fortis an excellent long-term investment.
Dollarama
Dollarama (TSX:DOL) has built a highly efficient business model through its direct-sourcing strategy, which eliminates intermediaries and strengthens its purchasing power. Combined with its streamlined logistics network, this enables the retailer to keep costs low and offer a broad range of products at attractive price points. As a result, Dollarama continues to generate resilient same-store sales across varying economic conditions.
The company also has significant growth opportunities. It plans to expand its Canadian and Australian store networks to 2,200 and 700 locations, respectively, by the end of fiscal 2034. Given its capital-efficient store model, rapid sales ramp-up, short payback period, and low maintenance capital requirements, these new stores should support sustained revenue and earnings growth.
In addition, Dollarama’s 60.1% stake in Dollarcity provides another compelling growth avenue. Dollarcity currently operates 752 stores across Latin America and plans to expand that footprint to 1,100 stores by the end of fiscal 2031. Dollarama also has the option to increase its ownership stake to 70% by the end of next year, which could further boost its share of Dollarcity’s earnings. Backed by these multiple long-term growth drivers, I remain bullish on Dollarama.
Hydro One
My final pick is Hydro One (TSX:H), Ontario’s largest electricity transmission and distribution utility, serving approximately 1.5 million customers. About 99% of its revenue is generated under a rate-regulated framework with regulatory periods exceeding five years. In addition, the company has no exposure to power generation, thereby insulating its earnings from commodity price fluctuations. This stable business model has enabled Hydro One to deliver consistent financial performance, generating a total shareholder return of approximately 112% over the past five years, or an annualized 16.3%. The utility has also increased its dividend for nine consecutive years and currently offers a forward dividend yield of 2.5%.
Looking ahead, Hydro One continues to expand its regulated asset base, with 15 transmission projects at various stages of development and construction. Rising population growth and ongoing residential development across its service territories could drive higher demand for electricity distribution services. Backed by its highly regulated business model, resilient earnings, and visible long-term growth opportunities, Hydro One is an excellent stock to own during periods of economic uncertainty.
