Blue-chip stocks are stable businesses you can rely on for satisfying long-term returns. Some of the best Canadian blue-chip stocks you can consider buying this month include BCE (TSX:BCE), Toronto-Dominion Bank (TSX:TD), and Brookfield Renewable Partners (TSX:BEP.UN), which are trading at good valuations.
BCE stock
BCE stock provides reliable returns from its dividend. At $56.17 per share at writing, the dividend stock is about 18% lower from its 2022 peak of $68 per share. At this quotation, it offers a mesmerizing massive dividend yield of almost 6.9%. BCE has increased its dividend for about 14 consecutive years with a 10-year dividend-growth rate of 5.2%, which matches its last dividend hike in February.
Higher interest rates may have triggered a correction in the big Canadian telecom stock that has sizeable debt on its balance sheet. At the end of the first quarter, its debt-to-equity and debt-to-asset ratios were 2.18 times and 68%, respectively — up from 1.83 times and 64% at the end of 2019, which was right around the time when the COVID-19 pandemic started breaking out. Interestingly, despite higher debt levels, the telecom’s trailing-12-month interest expense was 4.1% lower than in 2019, saving it $49 million in interest expenses in the 12-month period.
Brookfield Renewable Partners stock
Brookfield Renewable Partners stock has also been hammered by higher interest rates, even though management has primarily set up fixed-rate debt. It has about 97% fixed debt exposure and an average debt term to maturity of 12 years. Alas, a higher cost of capital makes investment projects less attractive. Additionally, investors may be interested to know that it has the same investment grade S&P credit rating of BBB+ as BCE.
BEP owns, operates, and develops clean energy globally. It has about a 25-gigawatt portfolio spanning hydro, wind, solar, and distributed generation and storage. Management targets to deliver market-beating total returns of 12-15% for investors for the long haul. Moreover, investors can count on cash distribution growth of at least 5% per year.
After correcting about 28% from the 2022 peak of about $50 per unit, the stock now offers a decently compelling cash distribution yield of over 5% at $35.74 per unit at writing. Investors can get exposure to the blue-chip stock in the renewable power and decarbonization solutions space at an attractive valuation right now, as analysts believe the stock trades at a discount of about 26%.
TD stock
TD Bank is a top Canadian bank stock to own for long-term investing. The stock has been performing weakly from increased uncertainty in the economy. Namely, economists still expect a recession to arrive by 2024 in Canada and the United States — two geographies that TD focuses on.
In normal markets, investors would be lucky to be able to buy quality TD shares for a 4% dividend yield. At $85.90 per share at writing, investors can start with a dividend yield of close to 4.5%. The stock trades at a discount with a fair price target of about $100 under normal market conditions.
The bank targets medium-term earnings-per-share growth of at least 7% per year. It beat that low target, achieving a growth rate of almost 8.5% in the past 10 fiscal years.
