Investors seeking stability and relatively steady returns in the long run could consider investing in Canadian blue-chip stocks. These stocks represent companies with well-established businesses and strong fundamentals. With a history of delivering profitable growth, these companies enhance shareholders’ returns through regular dividend payments and share buybacks.
While blue-chip stocks offer stability, it’s crucial to acknowledge they’re not without risks, including the possibility of capital loss.
With this background, let’s explore three blue-chip stocks every Canadian should own for capital gains and dividend income.
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Loblaw
Speaking of blue-chip stocks, Canadian investors could consider investing in Loblaw (TSX:L). As Canada’s biggest food and pharmacy retailer, the company operates a recession-resilient business and generates steady cash flows and earnings. Thanks to its low-risk business model, Loblaw stock remains relatively immune to large market swings, adding stability to your portfolio.
Despite operating a defensive business model, Loblaw stock has delivered above-average returns. For example, its stock has grown at a compound annual growth rate (CAGR) of about 19.5% in the past five years, generating a total return of nearly 144%.
Loblaw’s discount stores, diverse product range, and price freezes to combat inflation attract customers even during economic downturns. Additionally, the company’s efforts to optimize its retail network and boost private-label food product sales are expected to drive traffic and support profit margins in the coming years.
Beyond capital gains, Loblaw enhances its shareholders’ returns through share buybacks and dividend payouts. With its low-risk business model, solid growth, and growing earnings base, Loblaw is a compelling blue-chip stock to earn steady returns.
Canadian Natural Resources
Next is Canadian Natural Resources (TSX:CNQ), known for delivering stellar capital gains and solid dividends. Canadian Natural Resources is a leading oil and natural gas producer sporting a market cap of over $112 billion.
Thanks to its solid financial performances, led by high-quality assets and diversified revenue streams, Canadian Natural Resources stock has risen over 279% in five years. This represents an above-average CAGR of 30.5%.
Along with lucrative capital gains, Canadian Natural Resources boosted its shareholders’ return by consistently increasing its dividend at a very high rate. Specifically, Canadian Natural Resources increased its dividend for 24 consecutive years at an impressive CAGR of 21%.
The company’s long-life assets and high-value reserves position it well to generate strong financials regardless of commodity cycles. Further, its low maintenance capital requirement, cost control measures, and focus on reducing debt bode well for growth. In summary, Canadian Natural Resources is a solid blue-chip stock for investors seeking growth, income, and stability.
Bank of Montreal
Investors seeking to invest in blue-chip stocks could consider investing in leading Canadian bank stocks. Bank of Montreal (TSX:BMO) stands out among the top Canadian bank stocks for its ability to grow earnings in all market conditions and enhance shareholders’ value through regular dividend payments.
It’s worth highlighting that the Bank of Montreal has the longest dividend payment history among all Canadian companies. For example, it has been paying dividends for over 195 years. This shows the bank’s commitment to enhancing its shareholders’ value and its ability to grow earnings.
Bank of Montreal’s diversified revenue sources, high-quality loan portfolio, solid deposit base, and steady credit performance support its top and bottom line growth. In addition, its focus on improving operating efficiency cushions its earnings and supports dividend payments.
The financial services giant is well-positioned to deliver profitable growth in the upcoming years, driving its share price and dividend payouts.
