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

Better networks should lift BCE’s returns

Canada’s telecom regulator recently reversed a prior decision to cut the rates that large telecoms charge smaller Internet service providers to access their high-speed networks. The decision will give BCE more cash to build out its networks and set the stage for its future growth....

2 min read

Pat McKeough

Blue Chip Stocks

Wildfires are a small setback for CP

CANADIAN PACIFIC RAILWAY LTD. $90 is your #1 Conservative stock for 2021. The company (Toronto symbol CP; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 666.6 million; Market cap: $60.0 billion; Price-to-sales ratio: 7.9; Dividend yield: 0.8%; TSINetwork Rating: Above Average; www.cpr.ca) transports freight over a 23,700-kilometre rail network between Montreal and Vancouver, and to its hubs in the U.S....

1 min read

Pat McKeough

Blue Chip Stocks

Canada’s other banks are also great picks

The success of the COVID-19 vaccination rollout is letting more businesses re-open. Consumers also continue to repay their loans on time. As a result, the Office of the Superintendent of Financial Institutions has increased the minimum capitalization ratio (CET1, or Common Equity Tier 1) for Canada’s banks to 10.5%....

7 min read

Pat McKeough

Blue Chip Stocks

TD stands out in a strong field

Canada’s banks continue to rebound strongly from last year’s COVID-19 lows; rising vaccination rates are letting more businesses re-open, which further fuels stock gains. Consumers also continue to repay their loans on time.

We like all of the Big Five banks, but TD stands out thanks to its strong retail banking operations in Canada and the U.S....

4 min read

Pat McKeough

Blue Chip Stocks

IBM remains on track

IBM, $139.82, (New York symbol IBM; Shares o/s: 893.5 million; Market cap: $124.0 billion; Above Average; Yield: 4.7%) dropped in early July after the company announced that President Jim Whitehurst—appointed at the time of IBM’s $33 billion acquisition of cloud-software provider Red Hat—is leaving after two years.

Whitehurst became president when Arvind Krishna was named IBM CEO in January 2020.

Investors are likely worried the company will lose the benefit of Whitehurst’s expertise as it restructures to focus on cloud computing and artificial intelligence....

1 min read

Pat McKeough

Blue Chip Stocks

Scotiabank moves past the pandemic

Bank of Nova Scotia shares continue to soar beyond their pre-pandemic levels as the economy recovers from last year’s downturn. Meantime, restrictions that prevent federally regulated lenders like Scotiabank from raising dividends and buying back shares remain in effect....

1 min read

Pat McKeough

Blue Chip Stocks

Raytheon is upping its savings target

RAYTHEON TECHNOLOGIES CORP. $87 is a buy. The company (New York symbol RTX; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 1.5 billion; Market cap: $130.5 billion; Price-to-sales ratio: 2.2; Dividend yield: 2.3%; TSINetwork Rating: Above Average; www.rtx.com) took its current form on April 3, 2020, with the merger of United Technologies Corp....

1 min read

Pat McKeough

Blue Chip Stocks

3M can handle rising costs

3M COMPANY $192 is a buy. The company (New York symbol MMM; Income Portfolio, Manufacturing & Industry sector; Shares outstanding: 579.7 million; Market cap: $111.3 billion; Price-to-sales ratio: 3.4; Dividend yield: 3.1%; TSINetwork Rating: Above Average; www.3m.com) produces more than 60,000 items, including air purifiers, adhesives, bandages and components for medical devices....

1 min read

Pat McKeough

Blue Chip Stocks

Updates on your Conservative stocks: Canadian National Railway Co., Maple Leaf Foods Inc. and Teck Resources Ltd.

CANADIAN NATIONAL RAILWAY CO. $133 (www.cn.ca) is still a buy. CN recently agreed to acquire Kansas City Southern (New York symbol KSU), which operates a rail network of roughly 11,400 kilometres extending from the U.S. Midwest and Southeast into Mexico....

1 min read

Pat McKeough

Blue Chip Stocks

Our updates keep you on top of your stocks

GREAT-WEST LIFECO, $36.51, is still a hold. The insurer (Toronto symbol GWO; shares outstanding: 928.4 million; Market cap: $34.3 billion; TSINetwork Rating: Above Average; Dividend yield: 4.8%; www.greatwestlifeco.com) recently paid $4.4 billion for the retirement services business of Massachusetts Mutual Life Insurance Company....

2 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.