Invest in Blue Chip TSX shares


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Blue Top Stock is an industry leading company with a long history of growth, favorable returns to investors and a reliable business model. Think of blue chips as the GOATs of investing: these companies have become so established in the minds of consumers that it’s impossible to imagine a world without them.

For conservative investors, or those just starting out, blue-chip stocks could offer you enough security, while also promising good long-term returns. But what exactly are blue chip stocks and how can you find blue chip stocks in Canada? Below we’ll break it down.

What are blue chip stocks?

Blue chips (traditionally the most popular casino chips) are arguably the most stable, well-known and trusted companies in their respective industries. Think Disney, think Shopify, think Royal Bank of Canada. When a company achieved blue chip status, it most likely stood the test of time, setting itself above its competition and consolidating its position as an industry leader.

While there are no quantifiable measures that separate blue chips from others, most experts agree that blue chip companies have some outstanding characteristics, such as:

  • An industry leader with a solid business model that secures its future
  • A big market capitalization which continues to grow over time
  • A story of investor-friendly returns
  • A large, well-established brand that many consumers’ products and services cannot do without
  • A story of pay dividends, as well as to regularly increase these dividends

Why are blue chip stocks considered safe investments?

As with any stock, blue chips carry varying degrees of risk, although generally less risky than stocks of other classifications. When a company achieves blue chip status, it reaches a point where its reputation precedes it, where its products and services have become indispensable, and where the value of its shares is able to withstand periods of market volatility. All of these make blue chips considerably safer than, say, growth stocks or penny stocks.

In addition to stability, many top-notch stocks are easy to beginner investors understand. Since most people are familiar with top-notch products and services, you’re less likely to invest in something that is beyond your comprehension.

What are the best blue chip stocks in Canada?

Fortunately, Canada has some of the best blue-chip stocks, many of which are emerging from the growing pandemic of 2020-2021. If you are considering adding blue chips to your investment portfolio, here are some industry leaders you may want to consider.

1. Shopify (TSX: SHOP)

One of the youngest companies on this list, Shopify has nonetheless established a solid place in the league of blue chip companies. Not only does it have the largest market capitalization in Canada at around $ 225 billion (beating all banks and energy companies, which have long been the bedrock of the Canadian economy), but it has become a leader. worldwide in the field of electronic commerce.

Shopify has capitalized on an important business need: the need to build glamorous online stores with little to no programming knowledge. During the pandemic, Shopify helped retaile

rs and small businesses are replacing foot traffic with online sales, helping Shopify shares rise from around $ 600 per share in April 2020 to $ 1,800 per share in February 2021, peaking at $ 2,075 in July 2021.

If you think the Shopify ship left port a long time ago, you are wrong. This is a top-notch stock that deserves to be added to your portfolio no matter what type of investor you are.

2. Royal Bank of Canada (TSX: RY)

No discussion of blue chip companies can be complete without mentioning Canada’s largest bank, the Royal Bank of Canada. With a market capitalization of $ 185 billion (based on 2021 figures), Royal Bank has been a big name in Canada since it opened in 1864 (to put it into perspective: the most amazing invention in 1864 was the

steam plow).

What makes Royal Bank of Canada a strong, blue-chip company is its resilience. In 2008, as most of the world’s banks slipped into an economic recession, the Royal Bank remained stable, emerging stronger and without having to cut dividend payments. The same can be said of the most recent pandemic-induced downturn, which saw a drop in Royal Bank stock prices but not dividends.

At the current share price, Royal Bank’s dividend payout is 3.3%, a figure that is expected to rise once the government eases restrictions on dividend increases. It’s never too late to invest in Royal Bank because, well, it’s very likely to stay there.

3. Canadian National Railway (TSX: CNR)

With over 33,000 kilometers of track laid and over a century of operation, it’s no surprise that Canadian National is on the blue chip inventory list. This is a company that has been increasing its dividends for 25 years and increasing its share price by almost 400% in the past 10 years. That’s a lot for a business whose income comes from transporting materials.

4. Canadian Tire (TSX: CTC.A)

Almost as ubiquitous as poutine, maple syrup and moose is the giant Canadian retail chain, Canadian Tire. Indeed, most, if not all, Canadians have shopped at this nearly century-old retail store at least once in their lifetime. With its ability to survive a market downturn after the market downturn, not to mention a pandemic that crushed its foot traffic, it’s no wonder Canadian Tire is a blue chip stock for Canadian investors.

During the pandemic, Canadian Tire experienced a significant drop in sales. But mandatory closures and reduced foot traffic forced Canadian Tire to expand in one big way: e-commerce. Indeed, in recent years, Canadian Tire has also revisited its ‘catalog’ origins and launched a superb e-commerce platform that has silenced criticism and made the brand more resilient in a world that is increasingly turning. to online shopping.

In 2021, Canadian Tire has a market cap of $ 12 billion and pays quarterly dividends that look set for future increases. Overall, it could represent a safe investment for investors looking for a good retail stock.

5. Fortis (TSX: FTS)

Among the utility stocks in Canada, Fortis is a name you cannot ignore. As a leader in the regulated gas and electric utilities industry, you can be assured that Fortis will be around for a long time, at least as long as we depend on electricity and gas.

Fortis’ stability has enabled it to pay ever larger dividends to its investors. In fact, for almost 50 years, Fortis has increased its dividend every year, with the intention of increasing it by 6% every year until 2025. While Fortis may not be as new and innovative as, say, Shopify, it can play a great role in your investment portfolio.

Other blue chip stocks in Canada include:

Should you invest in blue chip stocks?

Just about any investor can benefit from blue chip stocks in an investment portfolio. While you might not get as much of a small-cap company with the potential for explosive growth, for example, you can appreciate the stability that blue-chip stocks can offer. In addition, you can earn large dividend yields, which you can then reinvest in your blue chips.

For Canadians who do not want to choose blue-chip stocks individually, you may want to consider buying stocks from a market-oriented company. exchange-traded funds (ETFs). Since an ETF contains stocks from many companies, you can spread your money over a wide variety of blue chip stocks without having to select them yourself.

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