The Best Canadian Blue Chip Stocks For January 2023

Can blue chip stocks be part of your winning investment strategy? A successful long-term approach to investing is to pick winning dividend stocks to hold forever and as you probably know, it’s a lot harder to do for a consistent period of time than you can imagine.

Many investors and stock analysts will share their opinion on many different stocks but the reality is that there are proven businesses with a long history of growth and success through good and bad times.

Those blue chip companies often have a leg up on the competition and lead the way with consumers for recognition.

Here is what you will learn:

• What a blue chip stock is
• The complete list of blue chip stocks on the Toronto Stock Exchange
• The top 10 blue chip stocks

What Are Blue Chip Stocks?

A blue chip stock has the following characteristics:

• The company is a leader in both market capitalization within its sector, its country and in its business segment.
• The company will often have products that are well-known to everyone and established within the household.
• The company will often pay a dividend and have paid a dividend consistently for many years. While it’s not required to pay a dividend, or have increased the dividend, they usually have established the pattern.

Blue chip stocks are considered to be more defensive with the ability to weather stock market storms. It doesn’t mean the stock price will not go down, it means they are expected to recover due to their established business and strong foothold.

The blue chip reference comes from understanding that a blue chip is the most valuable poker chip if you are curious about the reference. Watch this video for a great explanation.

Stay on top of your next investment decision with the Dividend Snapshot Screeners. Review the Chowder Rule along with the 3, 5, and 10 year ratios for dividend growth, EPS growth and the payout ratio to pick a solid investment for your portfolio.

Canadian Blue Chip Stocks

Here is what I consider to be the complete list of blue chip stocks on the Toronto Stock Exchange. I identified around 50 blue chip stocks from the Toronto Stock Exchange.

Top 10 Canadian Blue Chip Stocks

Below is the list of the best ranked blue chip stocks from the Dividend Snapshot Screener. I own a number of the stocks listed, see my stock holdings for more details. All data points are accurate as of the time of writing.

What you may find interesting is that many of the Canadian Dividend Blue Chip Stocks also trade on the NYSE as cross-listed stocks. Please note that from a market capitalization perspective, none of the Canadian REITs have made it on the list below.

The following list represents Canadian dividend stocks to hold forever – if you were to evaluate the holdings of many ETFs or mutual funds, you would find those companies.

1. Algonquin Power & Utilities Corp

Algonquin Power & Utilities is a diversified utility company in North America with $10 billion in total assets. The company engages in the generation, transmission, and distribution of water, gas, and electricity to communities across the U.S. 

As a growing renewable energy company, Algonquin Power owns a strong portfolio of long term contracted wind, solar and hydroelectric assets with 1.5 GW of total installed capacity.

The company has more than 50 power generation facilities and 20 utilities across North America. Algonquin’s utility business serves nearly 770,000 customers in twelve states across the U.S., through 1,200 miles of electrical transmission lines and 100 miles of natural gas transmission pipelines.

Key Investment Data

2. Alimentation Couche-Tard

Alimentation Couche-Tard is one of the largest Canadian companies and the owner of several Canadian convenience stores. The company also supplies road transportation fuel to approximately 1,300 locations in the U.S. and offers stationary energy and aviation fuel.

As a leading independent convenience store operator, Couche-Tard owns a network of nearly 10,000 convenience stores in 48 states in the U.S., ten provinces in Canada, as well as other countries.

It operates more than 16,000 stores worldwide. By geography, the US is its largest market accounting for 67% of 2018 revenues, followed by Europe (20%) and Canada (13%). The company operates through Couche-Tard and Mac’s brands in Canada and Circle K globally.

Key Investment Data

3. Telus

TELUS Corporation is the second-largest telecom company in Canada, providing a wide range of communications products and services such as data, IP, voice, television, entertainment, and video. 

The company has ~16 million customer connections, including 10.6 million wireless subscribers, 2.2 million Internet subscribers, 1.2 million residential network access lines, and 1.2 million TELUS TV customers. It is also Canada’s largest digital healthcare provider and has been a major telehealth player for over a decade. 

The telecom has a strong presence in the wireless segment which accounts for 55% of total revenue while the wireline segment constitutes the remaining 45%. Nearly 70% of the total earnings is derived from the wireless segment. The wireline segment comprises data, voice, and other services and equipment. 

Key Investment Data

4. Enbridge

Enbridge Inc. is the largest energy infrastructure company in North America. It is Canada’s largest natural gas distributor engaging in the collection, transportation, processing and storage of oil and gas. Enbridge caters to 3.7 million customers in Ontario, Quebec, New Brunswick, and New York.

Enbridge owns an extensive network of about 192,000 miles of natural gas and NGL pipelines across North America and the Gulf of Mexico. Its crude oil and liquids transportation systems are huge comprising of more than 17,000 miles of active pipelines.

The company is known for its high quality liquids and natural gas infrastructure assets. In addition, Enbridge has 3.1 Bcf/d of processing capacity and 438 Bcf of net natural gas storage capacity. It also owns interests in nearly 3,000 MW of renewable generation capacity.

Key Investment Data

5. Brookfield Asset Management

Brookfield Asset Management is a leading global alternative asset management company focusing on real estate, infrastructure, renewable energy as well as private equity. The firm serves institutional and retail clients through its four partnerships. It operates through Brookfield Property Partners, Brookfield Infrastructure Partners, Brookfield Renewable Partners, and Brookfield Business Partners.

Infrastructure investments account for the largest portion of investments at 45%, followed by real estate (20%), private equity (20%) and renewable power (~15%). Over 85% of its revenues are long term.

Brookfield Asset Management has a large global presence in over 30 countries which grants it a competitive edge for proprietary deal flow. Brookfield Asset Management invests in North America (86% of funds deployed), Europe (8%), South America (5%) and Asia (1%).

Key Investment Data

6. Brookfield Infrastructure Partners

Brookfield Infrastructure Partners is one of the largest owners and operators of infrastructure networks globally. The firm acquires good quality businesses, restructures its operations and subsequently sells them.

Brookfield’s business units include real estate, infrastructure, renewable power, and private equity. The firm has a diversified portfolio of high quality and long life assets spread geographically across North and South America, Asia Pacific and Europe. The firm is highly diversified by sectors and geographies which reduces volatility and safeguards against any market fluctuation.

Brookfield Infrastructure focuses on the ownership of stable cash flow generating assets operating under regulated frameworks. The firm is in a good position to benefit from strong infrastructural development across the world. The firm’s objective is to generate an equity return of 12%-15% in the long term and grow its annual distribution by 5%-9%.

Key Investment Data

7. Restaurant Brands International

Restaurant Brands International is a leading quick-service restaurant company in the world. Burger King, Tim Hortons, and Popeyes are its largest and most popular brands globally.

Restaurant Brands operates over 27,000 restaurants, including more than 17,800 Burger King restaurants, 4,800 Tim Hortons restaurants, and 3,100 Popeyes restaurants worldwide. In all, the company has more than 2500 franchises in over 100 countries. It has high market penetration in North America and Europe. The company focuses on localized menus and quality food ingredients in order to attract consumers.

It operates through three reportable segments: Tim Hortons (TH), Burger King (BK), and Popeyes Louisiana Kitchen (PLK). Popeyes is Restaurant Brands' fastest-growing chain, both in terms of revenue and restaurant count while Tim Hortons is one of the most loved restaurant brands in Canada.

Key Investment Data

8. Intact Financial

Intact Financial Corporation is the largest provider of property and casualty insurance in Canada and a leading provider of specialty insurance in North America. The company’s popularity can be gauged from the fact that about one in every five Canadians is a customer of Intact Financial products and services.

The company enjoys a 17% share in the P&C insurance market in Canada. In terms of business segments, personal and auto accounts for nearly 40% of DPW (direct premium written), followed by personal property (20%), commercial lines Canada (25%) and commercial lines USA (15%).

About 85% of the company’s revenue is derived from Canada and the remaining 15% is from the U.S. The company operates through Intact insurance, BrokerLink, OneBeacon and Belairdirect banners.

Key Investment Data

9. Canadian National Railway

Canadian National Railway is a leading transportation and logistics company in North America. The company owns the only transcontinental railway line in North America and provides intermodal, trucking, freight forwarding, warehousing and distribution services.

As North America’s leading supply chain player, Canadian National Railway carries more than 300 million tons of cargo annually. It is a fully integrated rail and transportation services company and is the top mover of aluminum, iron ore and base metal ore in North America.

Canadian National handles over 50% of all Canadian chemicals production and services the three major petrochemical centers in North America. Its product portfolio is well diversified with intermodal accounting for 25% of revenues, followed by petroleum & chemicals, and grains & fertilizers each at 17%. Forest products, metal, minerals, automotives, etc. constitute the remainder.

Key Investment Data

10. Canadian Natural Resources

Canadian Natural Resources is a diversified and independent energy producer in the world. It is the largest independent natural gas and heavy crude oil producer in Canada.  It operates a balanced mix of natural gas, light crude oil, heavy crude oil, and oil sands. The company holds some of the best oil sand assets in North America, particularly thermal in situ properties, having tremendous growth potential.

The company’s business can be broadly classified into Exploration and Production (North America, North Sea, offshore Africa), Oil Sands Mining and Upgrading, and Midstream and Refining segments. The Exploration and Production segment is Canadian Natural’s core business, while the other two businesses provide a nice diversification.

Canadian Natural Resources has a balanced mix of natural gas, light crude oil, heavy crude oil, bitumen, and SCO. The company also owns midstream assets consisting of two crude oil pipeline systems and cogeneration plants, which enables the transportation of heavy crude oil in international markets.

Key Investment Data