Here’s how to find high-quality Canadian stocks to watch for and profit from

Top Canadian stocks to watch for typically have a history of paying dividends and that will boost your long-term portfolio returns

The root of the term “blue chip” stems from the game of poker, as the blue chips represent the highest value. In poker as in stocks, luck averages out over time. You can’t profit in either one all the time. But you can improve your luck by learning how to avoid dumb mistakes.

Investing in Canadian blue chip stocks can give you an additional measure of safety in volatile markets.

True Blue Chips pay off

Learn everything you need to know in 'The Best Blue Chips for Canadian Investors' for FREE from The Successful Investor.

Canadian Blue Chip Stocks: Bank of Nova Scotia Stock, CP Rail Stock, CAE Inc. Stock and more.

Look for investments with a strong reputation to locate the best Canadian stocks to watch for a profitable portfolio

High-quality blue chip companies are good companies to invest in. 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. However, the problem is that “reputation” plays a key role in the definition.

When assessing blue chip companies that are good companies to invest in, you need to ask: What are they doing to remain vital? These companies should hold strong positions in healthy industries. And should have strong management that will make the right moves to remain competitive in a changing marketplace.

Stocks like these give investors an additional measure of safety in volatile markets. And the best ones—the good companies to invest in—offer an attractive combination of low p/e’s (the ratio of a stock’s price to its per- share earnings), steady or rising dividend yields (annual dividend divided by the share price) and promising growth prospects.

The best Canadian stocks to watch usually pay dividends

Good dividend stocks are a valuable component of any sound investing portfolio. The best dividend stocks provide a consistent dividend yield year after year. That’s key to your long-term investment success, because dividends can contribute as much as a third of your total return.

Here are six tips for picking the best dividend stocks:

  1. Dividends are a sign of investment quality.
  2. Watch out for unusually high dividend yields—it could be a danger sign.
  3. Look for a history of paying a dividend.
  4. The best dividend stocks dominate their markets.
  5. The best dividend stocks can feature hidden assets.
  6. Dividends can grow.

Follow these investing strategies to find Canadian stocks to watch and buy in order to lower your risk

For safer investing, adhere to our Successful Investor philosophy by focusing on investing in high-quality stocks that offer hidden value. As you likely know, we stress what we call “hidden assets”—assets that are easy to overlook, since their full value rarely appears on a company’s financial statements.

These assets include long-time real estate holdings that are worth much more than their balance-sheet value (usually original cost minus depreciation). Under-used brand names are another good example. When they are developed in-house, they won’t show any balance-sheet value. Another key hidden asset we favour is research spending. Companies write off their research outlays in the year in which they spend the money, but benefits such as new or better products may only materialize years into the future.

Learn to recognize which Canadian stocks to watch, and only buy the best with the help of our three-part Successful Investor approach

Find profitable, lower-risk Investments in high-quality Canadian stocks and you can build a strong portfolio

Instead of moving between extremes of risk, we continue to think investors will profit most—and with the least risk—by buying shares of well-established companies that have strong business prospects and strong positions in healthy industries.

That’s not to say that there won’t be surprises that affect every company in a particular industry. But well-established, safety-conscious stocks have the asset size and the financial clout—including sound balance sheets and strong cash flow—to weather market downturns or changing industry conditions.

We still feel that investors will profit the most with a well-balanced portfolio of high-quality individual stocks that follows our Successful Investor approach.

Use our three-part Successful Investor approach to make safer investments

You can limit your risk with stock investments by sticking with our three-part Successful Investor philosophy:

  1. Invest mainly in well-established companies with a history of sales and earnings, if not dividends;
  2. Spread your money out across most if not all of the five main economic sectors—Manufacturing & Industry, Resources & Commodities, Consumer, Finance and Utilities;
  3. Downplay or avoid stocks in the broker/media limelight.

What do you look for when considering stocks to buy?

What is your criteria for buying a stock you’ve watched for some time?


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