Canadian blue-chip stocks are top investments for investors looking for stability, steady capital gains, and dividend income over time. These are large-cap companies with fundamentally strong businesses, solid earnings bases, and the ability to grow at scale. With this background, here are the three blue-chip stocks that, in my opinion, every Canadian should own.
Blue-chip stock #1
Canadians could consider Alimentation Couche-Tard (TSX: ATD). The company operates convenience stores, retails fuel, and provides electric vehicle (EV) charging. Thanks to its value proposition and ease of shopping, Alimentation Couche-Tard has consistently delivered strong financial numbers that have driven its share price and supported higher dividend payments.
Over the past 10 years, Couche-Tard's revenues grew at a compound annual growth rate (CAGR) of 6.2%, while its adjusted earnings per share (EPS) increased at a CAGR of 15.2%. Thanks to its growing earnings base, Couche-Tard's stock price climbed over 317% over the past decade, generating an average annualized return of 15.3%.
Moreover, the retailer's solid earnings growth has driven its dividend higher. Its dividend per share has grown at a CAGR of 25.6% in the last 10 years.
Couche-Tard is well-positioned for continued growth. Its extensive network of stores, coupled with a value proposition, helps attract customers. Additionally, its membership programs help deepen customer engagement and drive repeat business.
The retailer's push into EV charging is another exciting growth avenue. With over 2,600 EV charging points in Europe and 260 in North America, Couche-Tard is well-positioned to capitalize on growing demand for renewable energy. This move will bring in new customers and support its growth.
Notably, Strategic acquisitions have been a key part of its growth strategy, enabling the company to expand its footprint and accelerate growth. Looking ahead, the company is poised to benefit from its acquisition strategy and focus on increasing private-label sales, which will enhance margins and provide an additional lift to profitability.
Blue-chip stock #2
Enbridge (TSX:ENB) is another top blue-chip stock to own for regular passive income and decent capital gains. It is an energy infrastructure company and operates an extensive network of liquids pipelines. Further, it is growing its investments in utility-like projects and renewable energy assets.
Enbridge's vast pipeline network connects key supply and demand hubs, ensuring high utilization. Its revenues are secured through long-term contracts and arrangements that minimize risks from fluctuating commodity prices and volumes. Further, with nearly three decades of consecutive dividend increases, Enbridge has shown its commitment to rewarding shareholders. Meanwhile, over the past five years, Enbridge's stock has delivered an annualized return of 11.5%, combining steady dividend payouts with capital appreciation.
Enbridge's multi-billion-dollar capital projects are set to bring new assets online, driving revenue and earnings growth. Additionally, the company's focus on expanding both its traditional energy infrastructure and renewable energy portfolio positions it to benefit from rising global energy demand.
Strategic acquisitions further enhance Enbridge's low-risk asset base, boosting cash flow and supporting its growth outlook.
Overall, Enbridge stock provides steady growth and income. Moreover, it offers a dividend yield of 6.2%.
Blue-chip stock #3
Royal Bank of Canada (TSX:RY), Canada's largest financial services institution, is a top blue-chip stock to own for steady income and capital gains. Over the past decade, the bank's shares have grown at a CAGR exceeding 12%. In addition to steady capital gains, it has a proven track record of consistently increasing its dividend payments.
RBC's diversified business model, a large and expanding customer base, and broad array of financial products and services enable it to capitalize on diverse market opportunities effectively. Further, the bank's commitment to technology investments, coupled with its strong capital position and high-quality liquid balance sheet, strengthens its ability to deliver sustainable earnings growth and dividend increases.
Royal Bank of Canada expects its earnings to grow at a CAGR of 7% over the medium term. Further, its recent acquisition of HSBC Bank Canada (HSBC Canada or HBCA) further bolsters RBC's business operations and sets the stage for future growth.
In summary, its diversified business model, strong balance sheet, cost savings, consistent earnings growth, and acquisitions position it well to deliver capital gains and increase its dividends.
