Blue Chip Stocks

Blue chip stocks are big, well-established, dividend-paying corporations with strong business prospects. These are companies that also have sound management that should be able to  make the right moves to keep competing successfully in a changing marketplace.

The root of the term “blue chip” stems from the game of poker, as the blue chips represent the highest value. Investing in blue chip stocks can give you an additional measure of safety in today’s turbulent markets.

Pat McKeough believes investors will profit most, and with the least amount of risk, by putting the bulk of your stock portfolio in shares of blue chip companies—those that are well-established, with strong balance sheets and steady earnings and cash flow. These are companies that have bright prospects in healthy and growing industries.

The best blue chips offer both capital gains growth potential and regular dividend income. The dividend yield is certainly one of the most concrete indicators of a sound investment. It is the percentage you get when you divide the current yearly dividend payment by the share or unit price of the investment. It’s an indicator we pay especially close attention to when we select stocks to recommend in our investment newsletters.

We feel most investors should hold the largest part of their investment portfolios in securities from blue chip companies. All these stocks should offer good “value”—that is, they should trade at reasonable multiples of earnings, cash flow, book value and so on. Ideally, they should also have above average-growth prospects in expanding markets.

Meanwhile, when investing in any type of stock, at TSI Network we recommend using our three-part Successful Investor strategy:

1-Invest mainly in well-established companies;
2-Spread your money out across most if not all of the five main economic sectors (Manufacturing & Industry; Resources & Commodities; Consumer; Finance; Utilities);
3-Downplay or avoid stocks in the broker/media limelight.

IGM Financial Inc.

The mutual fund provider saw its revenue rise in the latest quarter as sales increased despite new fee disclosure rules.

IGM FINANCIAL INC. (Toronto symbol IGM; www.igmfinancial.com) is Canada’s largest independent mutual fund provider. Power Financial owns 61.5% of IGM.

The company has two main businesses: Mackenzie Financial sells funds through independent brokers; and Investors Group offers mutual funds and other services, such as portfolio management, through 5,380 affiliated advisors.

IGM reported $147.1 billion of assets under management as of March 31, 2017. That’s up 10.3% from $133.4 billion a year earlier. The company’s fee income rises and falls with the value of the mutual funds and other securities it manages.


Hidden value, explosive profits

Big gains often come from hidden value. It shows up in well-known stocks that unlock the potential of their hidden assets. Pat McKeough shows you the secret in his exclusive report, Canadian Value Stocks: How to Spot Undervalued Stocks.

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Value Stocks: Assets under management down 1% in Q2

As a result, IGM’s revenue in the quarter ended March 31, 2017, rose 9.3%, to $789.7 million from $722.8 million a year earlier. Earnings increased 6.0%, to $177.1 million from $167.0 million; due to fewer shares outstanding, earnings per share gained 7.2%, to $0.74 from $0.69.

In March, IGM’s clients contributed $372.6 million more to its mutual funds than they took out. Specifically, overall sales rose $319.8 million at Investors Group, $51.6 million at Mackenzie and $1.2 million at Investment Planning Counsel.

The company will likely earn $3.31 a share in 2017, and the stock trades at just 12.1 times that forecast. The $2.25 dividend yields 5.6%.

Recommendation in The Successful Investor: BUY

For our views on an often underrated area of value investing, read How to realize big benefits from a holding company discount.  

For our recent report on a Canadian value stock we rate as a buy, read Asset sale cuts debt for Mitel Networks.

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Blue Chip Stocks Post Archives

Blue Chip Stocks: Telus ready for new growth

Blue Chip Stocks: Telus ready for new growth

Telus Corp. will increase its dividend by as much as 10% this year and next after upgrading its networks and expanding its presence in Western Canada.
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5 blue chip investment tips for the highest returns

5 blue chip investment tips for the highest returns

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Blue Chip Stocks: Metro shores up sales

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Blue Chip Stocks: Intel’s shift to new markets pays off

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The most popular stocks are rarely can’t-miss investments

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Canadian bank dividends can be some of the most consistent

Canadian bank dividends can be some of the most consistent

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This stalwart has long-term appeal

Dear client:
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Blue Chip Stocks: CP efficiency program rolls on

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The Ins and Outs of Capital Gains Tax for Investors

The Ins and Outs of Capital Gains Tax for Investors

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Blue Chip Stocks: McDonald’s slims down for growth

Blue Chip Stocks: McDonald’s slims down for growth

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Would McDonald’s founder Ray Kroc—the subject of new biopic “The Founder”—approve?
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Good companies to invest in: blue chips are usually your best bet

Good companies to invest in: blue chips are usually your best bet

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