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"Safest" Canadian blue chips?

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  • Jul 25th, 2017 7:49 pm
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[OP]
Deal Addict
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Dec 8, 2010
1922 posts
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"Safest" Canadian blue chips?

I'm just wondering what people think are the safest top, say, 5 companies in Canda - biggest moats, least likely to go bankrupt within the next 50 years or so?

FTS comes to my mind, having the longest history of increasing dividends.

Banks... unlikely to go bankrupt... but not impossible. You're not *likely* to use cryptocurrencies to buy houses. And presumably the banks will just buy up whatever threat comes their way.

Telecoms? Been around a while, and now own a lot more (they are combined media companies... I'd maybe be more sure with BCE if I could just buy the 'utility' bit honestly). Vulnerable to changing content consumption? I can't see a world without the need for infrastructure, though, so I'm assuming BCE will be around for quite a while.

Oil - Suncor - clearly profitable and very able to control their costs.

ENB - oil and gas have got to get from the fields to the refineries to our houses, right?

Any other suggestions? Assuming human life is still here and living in houses and condos (not necessarily driving cars), which companies will (almost) certainly still be here... in 2100?
45 replies
Newbie
Jan 13, 2008
85 posts
26 upvotes
Hard to argue against CNR. Maybe BAM.
Deal Addict
May 22, 2003
2087 posts
935 upvotes
Vancouver
Some mainstays in my Canadian Portfolio that I only add to and never sell: BNS, RY, BCE, FTS, BAM.A, ENB, T
Deal Addict
Nov 9, 2013
1674 posts
514 upvotes
Edmonton, AB
You basically are asking two questions - those with wide moats and those with excellent balance sheets (i.e. won't go bankrupt).

The problem with the 'wide moat' stocks that you list is that management knows it and they are generally loaded with debt. Granted, most are cash flow machines, but if interest rates continue to rise and refinancing was to become an issue it could constrain cashflow. I think CNR is the exception - it's balance sheet is in pretty good shape (especially compared to CP) but it's also a railway that trades at a nearly 22 P/E.
Deal Addict
Jul 23, 2007
3164 posts
1044 upvotes
Beats me. I always know what the safest Canadian blue chip stocks are when looking in the rear view mirror but I never know which one's are going to survive moving forward. Even for the companies that do survive, a number of them can turn out to be poor long term investments.

Down in the U.S., a number of years after the books "In Search of Excellence", and "Good to Great" were released some studies came out in regard to the companies mentioned in these books. Turned out going forward what were recognized previously as the unexcellent companies performed better as investments than the so called excellent companies.

In my own portfolio, for the most part, I just hang on to the stocks that have done well, and eventually try and get rid of the disappointments. Occasionally I'll even watch them go to zero or almost worthless, but nowadays I try to avoid that as much as possible.
Member
Feb 17, 2012
351 posts
43 upvotes
Toronto
Bell Rogers and Telus for me are the safest bets.
Deal Addict
Dec 11, 2007
1697 posts
274 upvotes
Markham
Blue chip traditionally refers to more than just moat and safety, and also the defensive nature of the business and the stability of earnings thru the entire business cycle

As great CNR and our banks have been in the past, industrials and financials are typically not part of the blue chip basket.

My top picks for Canadian blue chips would be our regulated utilities. Fortis and Hydro One
Second tier would contain the higher debt carrying telcos and pipelines like Enbridge, TransCanada, Rogers, Bell, Telus. Not an ideal blue chip, but close.

Banks and CNR fall into the "high quality" basket for me, one lower tier than blue chips.
Deal Addict
Feb 9, 2009
3782 posts
1462 upvotes
I wish we had a stock like Altria in Canada -- it smokes any blue chip in Canada (pun intended).
Deal Addict
Jun 3, 2009
3519 posts
399 upvotes
Montreal
Despite growing pressure from AMZN, I think many retailers like ATD.B and MRU will still be able to adapt and stay competitive.

Some industrials like CCL.B or insurers like IFC should still do well for the foreseeable future while offering decent growth.
Sr. Member
Oct 11, 2010
827 posts
233 upvotes
Charlottetown
Take a look at companies that consistently raise their dividends every year
Member
Oct 29, 2014
264 posts
53 upvotes
905
If this is for a portfolio going forward, one idea is to take the market cap leader in each of the sector mentioned (plus infrastructure imo) and then rebalance once a year.
[OP]
Deal Addict
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Dec 8, 2010
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Thanks for the replies so far. Lots to think about. While I'm waiting for my copy of the Intelligent Investor to arrive...

Looks like most companies suggested are overvalued. H is a good call; I had some after IPO but dropped it. I'll probably pick up some (though, again, overvalued).

I guess time to build up some cash and wait for prices to fall.
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Jul 17, 2008
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daverobev wrote:
Jul 16th, 2017 3:46 pm

I guess time to build up some cash and wait for prices to fall.
And you have already failed

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