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

Top stocks for safety-conscious investors

Here are two of our top safety-conscious recommendations. Both have strong growth ahead. Look for that to spur their share prices and your returns.

CANADIAN PACIFIC RAILWAY $100.65, is a buy. The company (Toronto symbol CP; shares outstanding: 930.1 million; Market cap: $94.5 billion; Rating: Above Average; Dividend yield: 0.8%) ships freight over a 23,700-kilometre rail network, mainly between Montreal and Vancouver....

2 min read

Pat McKeough

Blue Chip Stocks

Intact Financial still has room to move higher

When choosing stocks for the Finance sector of their portfolio, most investors gravitate toward banks. However, there are many high quality, non-bank financial stocks that you should also consider. For instance, we think Intact Financial offers investors a particularly unique combination of value and growth.

For the 12 months ended October 3, 2022, while the S&P/TSX Composite Index fell 5.6%, Intact shares climbed an impressive 19.9%....

4 min read

Pat McKeough

Blue Chip Stocks

TD expands its reach

TORONTO-DOMINION BANK $81 is a buy. The lender (Toronto symbol TD; Conservative Growth and Income Portfolios, Finance sector; Shares outstanding: 1.8 billion; Market cap: $145.8 billion; Price-to-sales ratio: 3.3; Dividend yield: 4.4%; TSINetwork Rating: Above Average; www.td.com) has formed a new alliance with Canada Post.

Under the deal, TD will offer personal loans through Canada Post outlets....

1 min read

Pat McKeough

Blue Chip Stocks

TD extends key relationship

TD BANK, $87.48, (Toronto symbol TD; Shares outstanding: 1.8 billion; Market cap: $159.5 billion; TSINetwork Rating: Above Average; Dividend yield: 4.1%; www.td.com) purchased the U.S....

1 min read

Pat McKeough

Blue Chip Stocks

Intact grows with savvy acquisitions

Intact Financial is now hitting new highs—and the shares are up a spectacular 364% since we first recommended them at $42.95 in our April 2010 issue. We think this Power Buy is poised to keep moving even higher for our subscribers.

INTACT FINANCIAL, $199.33, is a buy. The insurer (Toronto symbol IFC; TSINetwork Rating: Extra Risk) (www.intactfc.com; Shares outstanding: 175.4 million; Market cap: $35.2 billion; Dividend yield: 2.0%) is Canada’s largest provider of property and casualty coverage: it insures more than five million individuals and businesses....

2 min read

Pat McKeough

Blue Chip Stocks

Two blue chip leaders with growth in store

Here are two of our top safety-conscious stock recommendations. Both have strong growth plans in place; that should boost their prospects and at the same time, spur their share prices.

CANADIAN PACIFIC RAILWAY $98.32, is a buy. The company (Toronto symbol CP; shares outstanding: 929.9 million; Market cap: $91.6 billion; Rating: Above Average; Dividend yield: 0.8%) ships freight over a 23,700-kilometre rail network, mainly between Montreal and Vancouver....

2 min read

Pat McKeough

Blue Chip Stocks

Disney tops Netflix

WALT DISNEY CO., $122.81, is a buy. The company (New York symbol DIS; TSINetwork Rating: Above Average) (www.disney.com; Shares o/s: 1.8 billion; Market cap: $227.6 billion; No dividend) reported 26.3% higher revenue in the three months ended July 2, 2022, to $21.5 billion from $17.0 billion a year earlier....

1 min read

Pat McKeough

Blue Chip Stocks

This top bank remains a solid pick

Shares of Royal Bank have declined lately, mainly due to fears that rising interest rates will slow demand for new loans and lead to higher writeoffs. However, the implementation of mortgage stress tests in the past few years should keep any losses low. The bank also continues to expand its profitable wealth management operations.

ROYAL BANK OF CANADA $126 is a buy. The bank (Toronto symbol RY; Conservative Growth and Income Portfolios, Finance sector; Shares outstanding: 1.4 billion; Market cap: $176.4 billion; Price-to-sales ratio: 3.9; Dividend yield: 4.1%; TSINetwork Rating: Above Average; www.rbc.com) is Canada’s largest chartered bank by market cap....

2 min read

Pat McKeough

Blue Chip Stocks

Acquisition will push CP higher

This is the fourth year in a row that we’ve selected CP Rail as your #1 Conservative Buy. We’re particularly excited as the company’s upcoming merger with U.S.-based railway Kansas City Southern could spur the stock higher for many years to come.

While big acquisitions are always risky, adding KCS will greatly extend CP’s reach in the U.S....

4 min read

Pat McKeough

Blue Chip Stocks

IBM prospers in the cloud

IBM, $132.34, is still a buy. The company (New York symbol IBM; Shares o/s: 903.2 million; Market cap: $119.1 billion; TSINetwork Rating: Above Average; Dividend yield: 5.0%) is one of the world’s largest computing firms, with operations in over 175 countries.

IBM’s revenue in the three months ended June 30, 2022, rose 9.3%, to $15.54 billion from $14.22 billion a year earlier....

1 min read

Pat McKeough

Testimonials

The cornerstones of Pat’s strategy–value, diversification and timelines–make his newsletter, The Successful Investor, highly profitable while minimizing risk. His advice is no-nonsense, down-to-earth and based on solid research. You’ll know what to invest in and what to avoid.

Chuck Chakrapani, PhD
Investors Association of Canada
The older I get the better dividends look. For retirees and would-be retirees who want to sleep at night, I can’t think of a better source of information on reliable growing dividend income than Pat McKeough’s newsletter, Dividend Advisor.

Jonathan Chevreau
Financial Post Columnist
As a manager of more than $500 million in mutual funds, I have access to the best brokerage research available in this country. But I still take time to read Pat McKeough’s premium newsletters

John Sartz
I appreciate the 25 years of above market returns I received by following your advice. at least 95% of my investment decisions were based on TSI recommendations.

Chuck J.
Subscriber since 1996. Inner Circle Member Since 2006
The newsletters I receive in Inner Circle Pro are fantastic! I have been following Pat’s advice for years and everything he has said has been amazing. His commentaries are brilliant, insightful, educational, rational and balanced. My returns are almost double the TSE and I have referred many of my friends who have switched over to your services.

Walter H.
Inner Circle Pro subscriber

Browse Premium Topics

Cannabis

Spinoffs

One of the ways a company can try to unlock its own hidden value is by creating a separate company out of a corporate subsidiary. The parent company can either sell stock in the new company to the public, or spin it off—hand the stock out to its own investors.

Dividend Stocks

Dividend stocks make cash payouts that serve as a way for companies to share the wealth they’ve accumulated. These payouts are drawn from earnings and cash flow and paid to the shareholders of the company. Typically, these dividends are paid quarterly, although they may be paid annually or even monthly as well.

ETFs

What are ETFs?

ETF is an acronym for exchange traded fund. These exchange traded funds are used to track indexes as closely as possible, since investors cannot actually buy an index outright.

Value Stocks

What are value stocks?

One of the sweetest and most profitable pleasures of successful investing is to buy high-quality “value stocks” (or stocks that are reasonably priced, if not cheap, in relation to its sales, earnings or assets), then hold on to them as mainstream investors recognize the value and push up the share price.

Blue Chip Stocks

Penny Stocks

A penny stock in general trades for under five dollars a share, and as the name implies, sometimes for pennies. Most of the time they’re young companies, or start-ups in speculative markets like mining or technology.

Growth Stocks

Growth stocks are companies that are likely to have sales and earnings growth well above market average. Frequently they pay few, if any, dividends. Instead they typically reinvest any extra cash flow to promote further growth. Chosen wisely—according to Pat McKeough’s advice—high-quality growth-oriented stocks can be worthwhile additions to most well-diversified portfolios.

Wealth Management

Wealth management is the practice of putting your savings to work so that it continues to grow over your lifetime and will also benefit your heirs. Wealth management encompasses many different areas of investing like long term investment planning and retirement planning.

Mining Stocks

Mining stocks are investments in companies that produce or explore for minerals. Some of these minerals include uranium, coal, molybdenum (which is used in steelmaking), copper, silver and gold. They are affected by fluctuating commodity prices in addition to their own business and operating risks.

How To Invest

Pat McKeough has been making investing for beginners simple—and profitable—by helping investors make big gains for more than 25 years. His advice to beginning investors is the same as it is for all investors: buy high-quality, mostly dividend paying stocks (or ETFs that hold these stocks) and evenly spread your investments over the five main economic sectors (Resources, Manufacturing, Finance, Utilities and Consumer). Pat also believes investors should avoid stocks in the broker/media limelight and focus on those with hidden or little-noticed assets.

Energy Stocks

What are energy stocks?

Businesses that work in the extraction, refining and delivery of energy sources such as natural gas, oil, uranium and coal, are considered energy stocks.