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.


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Blue Chip Stocks Library Archives

BCE and Telus are our top telecoms

BCE INC. $59.56 (Toronto symbol BCE; Shares o/s: 898.2 million; Market cap: $53.5 billion; TSINetwork Rating: Above Average; Divd. yield: 5.1%; www.bce.ca) is Canada’s largest traditional telephone service provider: it has 3.0 million residential customers in Ontario, Quebec, Manitoba and the Atlantic provinces. The company also has… Read More

Procter still has appeal after big jump

PROCTER & GAMBLE CO. $103 (New York symbol PG; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 2.5 billion; Market cap: $257.5 billion; Price-to-sales ratio: 3.9; Dividend yield: 2.8%; TSINetwork Rating: Above Average; www.pg.com) made sales of $17.4 billion in its fiscal 2019 second quarter, ended… Read More

Faster networks help BCE compete

BCE INC. $59 (Toronto symbol BCE; Conservative Growth and Income Portfolios, Utilities sector; Shares outstanding: 898.2 million; Market cap: $53.0 billion; Price-to-sales ratio: 2.3; Dividend yield: 5.4%; TSINetwork Rating: Above Average; www.bce.ca) continues to improve the speed and reliability of its wireless and high-speed Internet networks. In… Read More

TRP hikes its dividend

TRANSCANADA CORP. $58.96 (Toronto symbol TRP; Shares outstanding: 914.0 million; Market cap: $54.6 billion; TSINetwork Rating: Above Average; Dividend yield: 5.1%; www.transcanada.com) operates a 91,900-kilometre pipeline network that pumps natural gas from Alberta to eastern Canada and the U.S. Its other operations include 4,900 kilometres of… Read More

Their Asian gains help offset a slower U.S.

MANULIFE FINANCIAL CORP. $22.46 (Toronto symbol MFC; Shares o/s: 2.0 billion; Market cap: $44.2 billion; TSINetwork Rating: Above Average; Dividend yield: 4.5%; www.manulife.ca) is Canada’s largest life insurer.
The company also sells other forms of insurance, including health, dental and travel plans; in addition, it offers mutual funds… Read More

CP Rail moves more of everything

CP reported record revenues in the latest quarter as it transported record volumes of all commodities. Those gains include a 38.9% jump in the number of carloads of crude oil—to 25,000 from 18,000 a year earlier. Oil volumes could, in fact, rise to over 40,000… Read More

Online lifts Walmart sales

WALMART INC. $100 (New York symbol WMT; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 2.9 billion; Market cap: $290.0 billion; Price-to-sales ratio: 0.6; Dividend yield: 2.1%; TSINetwork Rating: Above Average; www.walmart.com) is the world’s biggest retailer, with 11,300 outlets in 28 countries.
In its fiscal 2019 fourth quarter,… Read More

Updating BCE Inc., Telus Corp., and Imperial Oil Ltd.

BCE INC. $58 (www.bce.ca) and TELUS CORP. $47 (www.telus.com) have both used equipment from China’s Huawei Technologies Co. Ltd. in their wireless networks. Canada and the U.K. are now considering joining other members of the “Five Eyes” intelligence-sharing group (U.S., Australia and New Zealand) in banning Huawei equipment from their… Read More

CN still has years of growth ahead

CN’s shares have jumped 75% in the past five years, mainly due to the company’s strong focus on efficiency and heavy spending on new locomotives and tracks. Those investments have helped the company handle rising freight volumes of grain, fertilizer and forest products. The lack… Read More

IBM’s new businesses gain

IBM $134.38 (New York symbol IBM; Shares outstanding: 908.8 million; Market cap: $122.1 billion; TSINetwork Rating: Above Average; Dividend yield: 4.7%; www.ibm.com) reported lower earnings and revenue for the fourth quarter of 2018. However, those results beat the consensus forecasts.
In the quarter ended December… Read More

Expanding earnings justify these high P/Es

The share price for each of these fast-food leaders may seem expensive in relation to its earnings. However, we feel both p/e’s are reasonable given operational investments that should spur their earnings for years to come.
MCDONALD’S CORP. $186 (New York symbol MCD; Conservative Growth Portfolio, Consumer… Read More

Great-West takes on risk

GREAT-WEST LIFECO $28.10 (Toronto symbol GWO; shares o/s: 988.4 million; Market cap: $27.9 billion; TSINetwork Rating: Above Average; Dividend yield: 5.5%; www.greatwestlifeco.com) is Canada’s second-largest insurance company, after Manulife Financial. It also offers mutual funds and wealth management services. Power Financial (Toronto symbol PWF) owns 67.7% of… Read More

Loblaw adds another niche

LOBLAW COMPANIES $61.05 (Toronto symbol L; Shares o/s: 375.2 million; Market cap: $22.9 billion; TSINetwork Rating: Above Average; Dividend yield: 1.9%; www.loblaw.ca) shares are up over 21% since mid-October 2018. In contrast, the S&P/TSX Composite Index is down 8%.
The company continues to successfully introduce new products and… Read More

Key milestone adds to TD’s appeal

TD Bank reported higher earnings in the latest quarter for both its Canadian and U.S. businesses. The bank continues to expand; its recent $729 million acquisition of Regina-based wealth management firm Greystone Managed Investments now makes it Canada’s largest wealth management firm. Meanwhile, TD continues… Read More

Pfizer lifts value for shareholders

PFIZER INC. $42 (New York symbol PFE; Income Portfolio, Manufacturing & Industry sector; Shares outstanding: 5.8 billion; Market cap: $243.6 billion; Price-to-sales ratio: 4.6; Dividend yield: 3.4%; TSINetwork Rating: Above Average; www.pfizer.com) is one of the world’s largest makers of prescription drugs. Its top-selling brands include Lyrica… Read More

Each of these is a buy for consumer gains

LOBLAW COMPANIES $62.07 (Toronto symbol L; Shares outstanding: 375.3 million; Market cap: $23.0 billion; TSINetwork Rating: Above Average; Dividend yield: 1.7%; www.loblaw.ca) operates 1,082 supermarkets and 1,335 Shoppers Drug Mart pharmacies across Canada.
On November 1, 2018, Loblaw transferred its stake in Choice Properties REIT (see page 90)… Read More