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

Procter’s narrower focus pays off

PROCTER & GAMBLE CO. $133 is a buy. The stock (New York symbol PG; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 2.5 billion; Market cap: $332.5 billion; Price-to-sales ratio: 4.4; Dividend yield: 2.4%; TSINetwork Rating: Above Average; www.pg.com) gives you a stake in one of the world’s largest makers of household and personal-care goods.

The company continues to benefit from its 2014 plan to shed about 100 of its less-important brands....

1 min read

Pat McKeough

Blue Chip Stocks

Loblaw keeps prospering

LOBLAW COMPANIES, $62.64, (Toronto symbol L; Shares outstanding: 347.4 million; Market cap: $21.8 billion; TSINetwork Rating: Above Average; Dividend yield: 2.1%; www.loblaw.ca) is a buy. The company continues to benefit from strong demand for groceries as COVID-19 lockdowns prompt people to eat more of their meals at home.

In the quarter ended January 2, 2021, Loblaw’s overall sales rose 14.6%, to $13.29 billion from $11.59 billion a year earlier.

Same-store sales for its supermarkets rose 8.6% from a year earlier due to the higher customer purchases per visit as well as rising prices....

1 min read

Pat McKeough

Blue Chip Stocks

IBM ponders a sale

IBM, $122.36, is still a buy. The company (New York symbol IBM; Shares o/s: 893.6 million; Market cap: $107.5 billion; TSINetwork Rating: Above Average; Yield: 5.3%) announced recently that it will spin off its Managed Infrastructure Services unit....

1 min read

Pat McKeough

Blue Chip Stocks

Here’s our latest on two top blue chips: Bank of Nova Scotia and BCE Inc.

BANK OF NOVA SCOTIA $76.98 (Toronto symbol BNS; Shares outstanding: 1.2 billion; Market cap: $92.9 billion; TSINetwork Rating: Above Average; Dividend yield: 4.7%; www.scotiabank.com) is Canada’s third-largest bank.

Thanks to an improving economic outlook, the bank is reversing some of the provisions it booked to cover bad loans during the onset of the COVID-19 pandemic in 2020.

In the quarter ended January 31, 2021, Bank of Nova Scotia set aside $764 million to cover future loan losses....

2 min read

Pat McKeough

Blue Chip Stocks

3M poised to gain as economy reopens

Due to COVID-19, 3M had to quickly ramp up its production of various safety equipment, including N95 respirator masks (they block 95% of very small particles, including those containing the virus). That offset its slow sales to makers of automotive and electronic goods....

2 min read

Pat McKeough

Blue Chip Stocks

Intact’s digital push will keep paying off

Intact Financial dropped along with the market when COVID-19 first hit—the stock fell to as low as $104.81 in March 2020. But the shares have rebounded 39%, close to all-time highs, as investors again appreciate Intact’s underlying business strength. Meantime, we think this Power Buy is poised to keep moving even higher.

INTACT FINANCIAL, $145.60, is a buy. The insurer (Toronto symbol IFC; TSINetwork Rating: Extra Risk) (www.intactfc.com; Shares outstanding: 143.0 million; Market cap: $25.9 billion; Dividend yield: 2.3%) 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

CN can go higher even after its rise

CN’s shares have shot up nearly 50% from their March 2020 low of $92. Investors should expect the company to continue benefiting as the economy recovers from the COVID-19 pandemic. The recent cancellation of the Keystone XL oil pipeline by new U.S. president Joe Biden should also push more crude oil onto its rail networks.

Meantime, the company continues to improve the efficiency of its rail networks....

4 min read

Pat McKeough

Blue Chip Stocks

These blue chips offer you steady growth: CP Rail and Metro

CP Rail is well positioned to keep weathering any COVID-19-related slowdowns or disruptions to its shipping markets. Metro is in a similar position as it continues to build its strong market position as an essential service during the pandemic. Both stocks are still buys.

CANADIAN PACIFIC RAILWAY $448.83, is a buy. The company (Toronto symbol CP; shares outstanding: 133.3 million; Market cap: $60.5 billion; Rating: Above Average; Dividend yield: 0.9%) operates a 22,000-kilometre rail network between Montreal and Vancouver....

2 min read

Pat McKeough

Blue Chip Stocks

Diverse services cut the risk for investors

J.P. Morgan remains a great choice for the Finance segment of your portfolio despite the negative impact of low interest rates. That’s due to its strong exposure to fee-based activities like corporate financing. The bank should also resume regular dividend increases in 2021.

J.P....

2 min read

Pat McKeough

Blue Chip Stocks

Tap these resilient picks for 2021: Walmart, Alphabet and Verizon

We’ve singled out one stock from each of our three portfolios—Conservative, Aggressive and Income—as your top choices for new buying in 2021.

All three of these picks have held up well during the COVID-19 pandemic. They’re poised to move even higher as the rollout of new vaccines lets more parts of the economy re-open....

4 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.

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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

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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.

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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.