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.
Shares of Loblaw—and many others in the same industry— fell on news that online retailer Amazon.com Inc. will buy organic grocery chain Whole Foods (New York symbol WFM). Amazon will pay $13.7 billion U.S.
Investors fear that Amazon’s e-commerce expertise will let it capture a large share of the grocery retail business in the same way it has disrupted sellers of books, music and clothing.
However, Loblaw already lets its customers order groceries online and pick them up at the store. As well, they have many more locations in Canada compared to the 13 stores that Whole Foods operates in this country.
Real wealth starts with real blue chips
TBlue chip stocks are your surest promise of powerful, growing returns in capital gains and dividends for years. But some so-called “blue chips” are coasting on their past reputations. Our free report shows how and where to find the best of Canada’s blue chips. And identifies 7 top blue chip recommendations.
LOBLAW COMPANIES LTD. (Toronto symbol L; www.loblaw.ca) operates Canada’s largest supermarket chain. Its 1,096 stores include a variety of banners: Loblaw, Zehrs, Provigo, Real Canadian Superstore and No Frills. In March 2014, the company purchased the Shoppers Drug Mart chain for $12.3 billion in cash and shares. Shoppers now operates 1,324 drug stores across Canada.
The company continues to expand its Internet operations.
Those include its click-and-collect program, where customers can buy groceries and other items online and pick them up at a nearby store when it’s convenient for them. This method is a lot cheaper than delivering packages to a customer’s house. Loblaw now offers the service at 128 stores.
The company has also made it easier for its customers to refill and update their drug prescriptions over the Internet and pick them up at a Shoppers Drug Mart pharmacy. The company reported better-than-expected second quarter earnings this week; however, the stock fell 5%.
That’s because Loblaw warned investors that coming increases in the minimum wage for Ontario and Alberta could hurt its 2018 earnings. New healthcare regulations in Quebec—meant to cut the cost of generic drugs—are also likely to reduce the company’s revenue.
In the three months ended June 17, 2017, Loblaw’s overall sales rose 3.2%, to $11.1 billion from $10.7 billion a year earlier.
Excluding gasoline purchases, same-store sales at Loblaw’s supermarkets rose 1.0% in the quarter. Higher volumes offset lower selling prices.
Same-store sales for Shoppers Drug Mart gained 3.7%. That reflects a 2.9% rise in prescription drug sales and a 4.5% increase in the sale of other merchandise.
Overall earnings in the quarter rose 8.0%, to $445 million from $412 million a year earlier. Earnings per share gained 9.9%, to $1.11 from $1.01, on fewer shares outstanding. That beat the consensus forecast of $1.10.
The company now plans to spend $1.3 billion to upgrade its operations in 2017. That includes spending $1.0 billion on its retail stores across the country.
Loblaw has also raised its quarterly dividend by 3.8%. Starting with the July 2017 payment, investors receive $0.27 a share, up from $0.26. The new annual rate of $1.08 yields 1.5%.
The stock trades at a moderate 16.0 times the $4.44 a share the company will probably earn in 2017.
With higher material costs and taxes weighing on its revenues, Campbell Soup makes an acquisition to boost e-commerce, looks to expand overseas sales and embarks on a major cost-cutting plan
CAMPBELL SOUP CO. (New York symbol CPB; www.campbellsoupcompany.com) is the world’s largest maker of canned soups… Read More
Blue chip companies with a history of paying dividends will be among your most profitable stocks
Blue chip companies are typically defined as firms whose stocks have a national reputation for quality, reliability and the ability to operate profitably in good times and bad.
Blue chip stock investing can be easier if you use the pointers we share in this article
Aim above all for investment quality and diversification in your blue chip stock investing.
The majority of the stocks we regard as blue chips reward investors with both dividends and… Read More
The purchase of Columbia Pipeline Group has spurred TransCanada’s revenue and earnings as power producers switch to oil from coal.
TransCanada recently completed a major acquisition in the U.S. The purchase increased its natural gas pipeline assets by 40%. That will help the company… Read More
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… Read More
IBM shares are down 17% from their February 2017 peak, but that—plus the growing success of the company’s new internet business—increases its appeal.
INTERNATIONAL BUSINESS MACHINES CORP. (New York symbol IBM; www.ibm.com) began operating in 1911, and is now one of the world’s largest computer… Read More
If you want an extra level of security in your portfolio, then you should look for blue chip Canadian stocks
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… Read More
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.
TELUS CORP. (Toronto symbol T; www.telus.com) has 8.4 million subscribers and is Canada’s second-largest wireless carrier, after Rogers Communications. In… Read More
Here are some key blue chip investment tips that will help you build a stock portfolio for maximum returns
The best stocks to hold in your portfolio all have one thing in common: They give you reason to believe they might be worth holding on to… Read More
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
A key element of our investment advice is to spread your money across most if not all the five economic sectors: Finance; Utilities; Consumer Goods & Services; Resources & Commodities; and Manufacturing & Industry. That way, you avoid overloading yourself with stocks that are about… Read More
The company has now applied its chip-making expertise to faster-growing fields, with earnings jumping more than 15% in the last fiscal year.
INTEL CORP. (Nasdaq symbol INTC; www.intel.com) is the world’s leading maker of computer chips: its products power 80% of all personal computers. The company… Read More
The most popular stocks, which are often in the media or broker limelight, are often overpriced and may plunge.
Brokers get information from the media. Investment journalists spend a lot of time talking to brokers, and company managers listen to both. A feedback loop can develop… Read More
Characteristics of the best Canadian bank to invest in: dividends, growth, and investment quality
On the whole, investors have underestimated Canada’s top bank stocks for as long as I’ve been in the investment business. As a result, the best Canadian bank to invest in is often… Read More
Canadian Utilities helped its holding company, ATCO, more than double its profit in 2016 despite weaker revenue.
ATCO LTD. (Toronto symbols ACO.X [class I non-voting] and ACO.Y [class II voting]; www.atco.com) gets most of its earnings from its 52.8% stake in Canadian Utilities (Toronto symbol CU).
It… Read More
Do you want more dividends? If so, investing in Canadian banks may be for you
Investing in Canadian banks offers a key lower-risk investment for any portfolio. As well, the big five Canadian bank all have long histories of annual dividend increases.
Canadian bank dividends are the top reasons for investing in Canadian banks
Banks remain key lower-risk investments for almost any portfolio. As well, the big-five Canadian bank stocks all have long histories of annual dividend increases.
Canadian bank dividends are a major reason to invest in banks.
BCE continues to invest heavily in its networks. Those improvements have helped the company attract more high-speed Internet customers. They’ve also helped BCE add more wireless subscribers as an increasing number of Canadian households give up their landlines.
The company’s upcoming $3.9 billion acquisition of… Read More
U.S. President Donald Trump’s plan to renegotiate the North America Free Trade Agreement (NAFTA), along with the possibility of new tariffs, could hurt cross-border traffic for Canada’s main railways. However, it seems Trump is mainly concerned about U.S. trade with Mexico rather than Canada.Meanwhile, CP… Read More
Capital gains occur when an investor sells an asset. To calculate capital gains, the total of the adjusted cost base (ACB) is subtracted from the proceeds of the sale. The adjusted cost base of the shares is equal to the cost of the shares plus… Read More
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