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

Our top telecoms are ready for a growth spurt

BCE and Telus are high-quality firms with businesses that were well-prepared to withstand the COVID-19 slowdown. Longer term, the recent launch of their new ultrafast 5G wireless networks provides strong growth prospects and should boost their cash flow to pay for dividend increases.

TELUS, $27.51 (Toronto symbol T; Shares outstanding: 1.4 billion; Market cap: $37.2 billion; TSINetwork Rating: Above Average; Dividend yield: 4.6%; www.telus.com) gives you a stake in a wireless business that has 10.8 million subscribers....

2 min read

Pat McKeough

Blue Chip Stocks

Good pick for post-pandemic gains

McDonald’s shares have rebounded strongly from last year’s coronavirus shutdowns. That’s due to the fast-food leader’s plan to expand its drive-thru capacity and keep most outlets operating despite the pandemic. New investments in online ordering and home delivery have also helped it overcome the downturn.

The stock is poised for additional gains as more and more areas of the world re-open....

5 min read

Pat McKeough

Blue Chip Stocks

Our top insurers are making smart moves

Business for our two top Canadian insurance recommendations remains strong, both in Canada and internationally. These two stocks have recovered all of the ground they lost in March 2020—and we think they are now poised to move even higher. Meanwhile, each insurer offers you solid, sustainable dividend yields.

MANULIFE FINANCIAL CORP., $27.19, is a buy. This safety-conscious blue-chip company (Toronto symbol MFC; Shares o/s: 1.9 billion; Market cap: $52.0 billion; TSINetwork Rating: Above Average; Dividend yield: 4.1%; www.manulife.ca) is Canada’s largest life insurer.

Manulife sells other forms of insurance, including health, dental and travel plans; its mutual funds and investment management services further diversify its revenue stream.

As of March 31, 2021, the company had $1.3 trillion in assets under administration....

2 min read

Pat McKeough

Blue Chip Stocks

CP stands by its bid

CANADIAN PACIFIC RAILWAY $468.87, is a buy. The company (Toronto symbol CP; shares o/s: 135.6 million; Market cap: $61.6 billion; Rating: Above Average; Dividend yield: 0.8%) recently offered to acquire U.S.-based railway Kansas City Southern (New York symbol KSU) for roughly $29 billion U.S....

1 min read

Pat McKeough

Blue Chip Stocks

TD Bank powers through COVID

Even with the economic disruption brought on by COVID-19, we like the long-term prospects for investors in TD Bank. This Canadian big bank was as well prepared—and well capitalized—to handle the pandemic as it was the 2008-2009 financial crisis. We still see TD Bank as a top pick, especially given its expanding and profitable U.S....

1 min read

Pat McKeough

Blue Chip Stocks

Your #1 pick just got better: CP Rail

CP’s shares fell slightly after it announced it would merge with U.S. railway Kansas City Southern. Investors initially thought CP was paying too much. However, the stock quickly recovered as investors realized the major long-term benefits of this takeover.

The combined company will be able to better serve a wider range of customers in more parts of North America....

4 min read

Pat McKeough

Blue Chip Stocks

CP makes a bid for KSU

CANADIAN PACIFIC RAILWAY $475.99, is a buy. The company (Toronto symbol CP; shares o/s: 133.3 million; Market cap: $63.0 billion; Rating: Above Average; Dividend yield: 0.8%) has now agreed to acquire U.S.-based railway Kansas City Southern (New York symbol KSU) for roughly $29 billion U.S....

1 min read

Pat McKeough

Blue Chip Stocks

TD adds bond expertise

TD BANK $83.66 is a buy. The bank (Toronto symbol TD; Shares o/s: 1.8 billion; Market cap: $151.8 billion; TSINetwork Rating: Above Average; Dividend yield: 3.8%; www.td.com) has now agreed to buy Headlands Tech Global Markets....

1 min read

Pat McKeough

Blue Chip Stocks

These Canadian insurers lift your prospects

Business for our two top Canadian insurance recommendations remains steady despite COVID-19—and both have now rebounded to their all-time highs. Meanwhile, due to the pandemic, Canadian financial regulators have instructed federally regulated firms, including Manulife and Sun Life, to postpone their planned dividend increases....

2 min read

Pat McKeough

Blue Chip Stocks

Weston offers you assets at a discount

George Weston now plans to sell off its 139-year-old Weston Bakery unit. That will give it lots of cash—potentially as much as $2.2 billion or more—to buy back shares or boost dividends. At the same time, a sale will help to reduce George Weston’s “holding company discount” (the tendency of holding companies to trade for less than the total value of their assets)....

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.