10 best Canadian blue chip stocks to hold long-term

If you want to diversify your investment portfolio with stocks, use blue-chip stocks in Canada, which are safer and more likely to pay long-term

10 best Canadian blue chip stocks to hold long-term

This primer provides details about investing in Canadian blue chip stocks. Share it with your clients before you help them start investing in them.

If you want to diversify your investment portfolio with stocks, use blue-chip stocks in Canada, which are safer and more likely to pay long-term. Here are ten to discuss with your advisor.

What are blue chip stocks?

Blue chip stocks are named after the most valuable blue chips in poker. In investing, they denote companies that may be leaders in their sector or country with well-known products. The companies usually pay a dividend, and have done so consistently for years. They’re also considered to be the most defensive to weather stock market storms. It doesn’t mean the price won’t fluctuate, but they’re usually strong businesses that recover. Check these top blue chip stocks in Canada.

10 Best Canadian blue chip stocks

Algonquin Power & Utilities Stock – Dividend Yield: 3.89%; Market Cap: $11.65 billion: Algonquin, a 32-year-old utility distribution company, is a leader in the green energy sector. It generates, transmits, and distributes water, gas, and electricity to communities across the U.S. and has a renewable energy business. It owns a strong portfolio of long-term contracted wind, solar, and hydroelectric assts. It’s been raising its dividends for nine years. It’s also one of the few companies that are well-poised for the future and a stronger push toward green energy would turn it into a national leader in utility and power production. It has a large consumer-base and $11 billion worth of assets. Its strong 21% CAGR makes it one of the best Canadian blue chip stocks for long term investing. 

BCE Stock – Dividend Yield: 5.98%; Market Cap: $52.97 billion: This 37-year-old telecom giant is the leader in its sector, and with Telus and Rogers, dominates 90% of the market. Given that it’s moving toward 5G, it may keep growing for decades. It has a powerful balance sheet, many assets, and several brands with household names. It’s been providing good dividends for more than a decade, and its current 10-year CAGR is 10.6%.

Canadian National Railway (CNR) Stock – Dividend Yield: 1.84%; Market Cap: $94.66 billion: The century-old CNR is a transportation and logistics giant and the largest railway in Canada. It owns the only transcontinental railway line in North America and provides intermodal, trucking, freight forwarding, warehousing, and distribution services as well as 2,000 miles of railroad, so it dominates both cargo and passenger transportation. It’s also been offering great dividends for 24 years. While it’s yield isn’t great, its capital growth potential is. Its 10-year CAGR is 17.39%.

Constellation Software Inc. – Dividend Yield: 0.271%; Market Cap: $39.56 billion: Constellation is a diversified Canadian-based software company that acquires a diverse array of profitable assets and holds them long-term. It’s a 25-year-old leader in the tech sector and the second-largest software company by market cap. It currently has 125,000 customers in more than 100 companies. Constellation’s balance sheet is strong, and its future growth looks promising, though it’s usually overpriced, which is understandable, given its 10-year CAGR of 44.7%.

Enbridge Stock – Dividend Yield: 6.82%; Market Cap: $86.81 billion: This oil and gas company is the largest energy distributor in North America. It owns an extensive network of pipelines across North America and the Gulf of Mexico. It is Canada’s largest natural gas distributor, collecting, transporting, processing, and storing oil and gas. It serves 3.7 million customers in Ontario, Quebec, New Brunswick, and New York. Enbridge has had a very generous yield, two consecutive years of dividend growth, and a 10-year CAGR of 8.96%, but it’s also facing some uncertainty surrounding the energy sector. The company has the most extensive oil pipeline networks in North America, but the sector may look quite different in two decades. So, it is one of the riskier long-term bets here.

Franco-Nevada Stock – Dividend Yield: 0.72%; Market Cap: $32.84 billion: Franco-Nevada, now 13 years old, is the third-largest gold company, but it’s a leader in the royalty and streaming sector. It’s been paying great dividends for 12 years. It also has a powerful ten-year CAGR of 19.4%, making it one of the best blue chip stocks in Canada.

Manulife Financial Corporation – Dividend Yield: 4.12%; Market Cap: $51.46 billion: Manulife, now 133 years old, provides life insurance services in Canada and the U.S. It’s a leader in the insurance industry with strong revenues and a globally recognized brand. It’s the largest insurance company by both market capitalization and assets under management ($1.2 trillion). It’s also among the 15 largest insurance companies in the world. It has increased its dividends for the past six years and is offering a generous yield now.

Metro Stock – Dividend Yield: 1.78%; Market Cap: $16.79 billion: Metro is a leading food and pharmaceutical company with operations in Quebec and Ontario. It’s one of Canada’s largest food retailers with such stores as Metro Plus and Food Basics. Its drug stores include Metro Pharmacy and Drug Basics. It’s had 25 years of dividend increases, but its capital growth prospect is the main reason to hold this one. While its 10-year CAGR of 16% may not be as large as others on this list, it’s still respectable. This blue-chip company is a consumer staple stock.

Royal Bank of Canada (RBC) Stock – Dividend Yield: 3.66%; Market Cap: $169.53 billion: RBC, now 156 years old, is the leader in the banking industry. It’s the largest Canadian bank by assets and market capitalization and the second largest security on the stock exchange. While it primarily has a Canadian presence through its wide network of branches, it operates in 36 countries and has more than 17 million clients. It has also made great strides toward online banking. Its 10-year CAGR is 11.59% and it has increased its payments for nine consecutive years.

Toronto Dominion (TD) Stock – Dividend Yield: 3.71%; Market Cap: $154.19 billion: TD, now 165 years old, is one of the 10 biggest securities trading on the Toronto Stock Exchange and its the most generous dividend grower among the big five banks. It has a large presence in the U.S. and its number of branches make it the fifth largest North American bank. TD serves 26 million people in the world. With 13 million digital active digital users, it’s also among the top online banks.