How’s it going, Fools? I’m back again to highlight three large-cap companies that I find especially attractive. As a reminder, I do this primarily for conservative investors because large-cap stocks
- offer the stability that can only come from well-established businesses; and
- typically provide steady and hefty dividend income.
While large-cap stocks won’t double overnight, they can be ideal for risk-averse investors looking for some safety.
So, without further ado, let’s get to this week’s big-cap stock picks.
Natural selection
Kicking off our list is Enbridge (TSX:ENB)(NYSE:ENB), which boasts a market cap of $73 billion. Over the past three months, shares of Canada’s largest natural gas distributor have pulled back about 9%, making it a decent time to swoop in.
In Q2, the company’s adjusted EPS of $0.65 easily walloped Bay Street estimates by $0.12. Meanwhile, operating cash flow clocked in at an impressive $3.3 billion versus $2.6 billion in the year-ago period. Looking forward, Enbridge now sees distributable cash flow per share at the upper half of its $4.15-4.45 range.
Investors remain concerned over the company’s financial position, but management — through asset sales and transaction simplification — continues to make healthy strides in de-risking operations.
That improvement, coupled with a juicy dividend yield of 6.2%, makes Enbridge too good to pass up.
Insured opportunity
Next we have insurance giant Great-West Lifeco (TSX:GWO), which currently has a market cap of $29.8 billion. Over the past year, the stock is down a significant 17% versus a loss of just 2% for the S&P/TSX Capped Financial Index.
Putnam — the company’s asset management arm — continues to post losses and weigh heavily on the bottom line. But, overall, Great-West’s operations are holding steady.
In Q2, the company’s fee and other income increased 4% to $1.5 billion as sales increased 32% to $33.1 billion. Moreover, adjusted return on equity (ROE) came in at a strong 14%. Management attributed the results to solid growth in both North America and Europe.
After the stock’s recent slump, Great-West now sports a cheapish forward P/E of 9.2, as well as an attractive yield of 5.2%.
Imperial authority
Our final large-cap pick this week is Imperial Oil (TSX:IMO)(NYSE:IMO), which currently sports a market cap of $35 billion. Over the past six months, shares of the oil and gas giant are up an impressive 19% versus a loss of 6% for the S&P/TSX Capped Energy Index.
Imperial continues to generate stable cash flow, which dampens the impact of wild oil price swings. Over the past 12 months, the company has generated a whopping $3.8 billion in operating cash flow. Furthermore, operating cash flow has grown an impressive 74% over the last three years — fueling steady dividend increases in the process.
Imperial’s strong cash flows, stable dividend, and rock-solid balance sheet make it a relatively safe way to gain energy exposure. And at a forward P/E in the low teens, the price still seems reasonable.
Fool on.
