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.

Metro Inc.

Same-store sales for this leading grocer increased in the latest quarter, even as it moved to convert some of its locations to discount outlets.

METRO INC. (Toronto symbol MRU; www.metro.ca) operates 600 grocery stores and 250 drugstores, in Quebec and Ontario.

The stock has declined 15% since it hit $48 in July 2016. That’s mainly because falling food prices and strong competition have slowed its sales and earnings growth.

In response, Metro will convert some of its conventional stores to its discount chain, Food Basics. It’s has also begun to renovate existing outlets.

Metro aims to spur future growth with premium products. Some of those will come from its 75% stake in privately held bakery Première Moisson, which has 25 stores and two plants. The company also owns 55% of Adonis Group, which sells Mediterranean-style foods through 11 stores.


Yes, You Can Have Low Fees and High Returns

Clients come to Successful Investor Wealth Management for many reasons, but first of all for this one. The portfolios we have managed for our clients over the past 15 years have returned an uncommonly high average of 9.01% net per annum, compounded—after fees are deducted. And we have a simple fee structure, with no hidden costs.

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Blue Chip Stocks: Alimentation Couche-Tard stake is 21% of market cap

Those businesses continue to pay off for Metro. For its 2017 first quarter, ended December 17, 2016, same-store sales rose 0.7%, even though average food prices fell 1.0%. The company also continues to benefit from its 5.7% stake in Alimentation Couche-Tard (Toronto symbol ATD.B). That company operates convenience stores in North America and Europe. (Couche-Tard is a recommendation of Stock Pickers Digest, our newsletter that focuses on aggressive investing.) Based on current prices, that holding is worth roughly $2.0 billion, or 21% of Metro’s market cap.

The company’s balance sheet is sound. As of December 17, 2016, its long-term debt was just $1.4 billion, or 15% of Metro’s market cap. It also held cash of $6.6 million. Metro’s earnings will likely rise 8.4% in fiscal 2017, to $2.59 a share. The stock trades at 15.8 times that forecast. The company also recently increased its quarterly dividend by 16.1%. The new annual rate of $0.65 yields 1.6%.

Recommendation in The Successful Investor: BUY

For our views on one group of perennial Canadian blue chips, read Investing in Canadian banks is a route to lower risk.

For our recent report on a U.S. blue chip tech stock, read Intel’s shift to new markets pays off.

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Blue Chip Stocks Post Archives

Blue Chip Stocks: Metro shores up sales

Blue Chip Stocks: Metro shores up sales

Same-store sales for this leading grocer increased in the latest quarter, even as it moved to convert some of its locations to discount outlets.
METRO INC. (Toronto symbol MRU; www.metro.ca) operates 600 grocery stores and 250 drugstores, in Quebec and Ontario.
The stock has declined 15% since… Read More

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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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How to decide which Canadian bank stocks are best for you

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Canadian bank dividends can be some of the most consistent

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The Ins and Outs of Capital Gains Tax for Investors

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Blue Chip Stocks: McDonald’s slims down for growth

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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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How to find the best blue chip dividend stocks

How to find the best blue chip dividend stocks

Here are some tips for finding the best blue chip dividend stocks for your portfolio.
The best blue chip dividend stocks 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… Read More