4 Best Blue-chip TSX Stocks for the Last Four Months of 2022

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Blue-chip stocks are the leading companies in different industries that have proved their mettle over the years. They have withstood multiple market storms. These companies have successfully established themselves as household names through their diverse range of superior quality products and services. So, they are expected to recover their value in the face of market adversities due to their established business and hold over their industries. 

best blue-chip TSX stocks to buy now

In present times as the economy is expected to enter a recessionary phase, adding these strong-performing blue-chip TSX stocks to the portfolio will be a smart move.

1. Royal Bank of Canada

Royal Bank of Canada is the country’s biggest bank in terms of market capitalization. This multinational financial services company, which serves over 17 million clients worldwide, provides Personal & Commercial Banking services and is regarded as one of the most stable performers in the economy. The current year has been challenging for most businesses due to various factors, such as staggeringly high inflation levels, rising interest rates, and disturbing global geopolitical conditions. Nonetheless, Royal Bank kept its value relatively stable, losing only about 8% this year.

The best thing about Royal Bank is its diversified portfolio, which enables it to earn revenue from multiple sources. Based on its last year’s report, it can be seen that 36% of its revenue comes from the wealth management segment while the rest is from other segments like personal and commercial banking, investor and treasury services, insurance, and capital markets. External factors have taken a toll on the banking company’s recent financials, especially its personal & commercial banking and insurance segments. Its Q3 FY22 net income was down by 17% year on year to $3.6 billion, and diluted EPS (Earnings Per Share) fell 15% year on year to $2.51 per share. 

The results are concerning, but because its long-term financial growth is still on track due to the continued performance of its other segments, long-term investors will not be affected. Besides that, because Royal Bank is an outstanding blue-chip Canadian high dividend yield aristocrat with a current yield of 4.07%, it is also appropriate for dividend investors.

2. Fortis

Fortis is one of the country’s largest electric and gas utility companies, with operations in Canada, the United States, Central America, and the Caribbean. It generates, transmits, and distributes electricity to approximately 438,000 retail customers in southeastern Arizona and 100,000 retail customers in Arizona’s Mohave and Santa Cruz counties. While most of the top industry players have underperformed in the market in the last six months due to difficult economic conditions, Fortis has gained 2.12%.

Fortis’ business model enables it to generate recurring, stable revenue streams at all times around the year. Its business, in general, is unaffected by economic fluctuations. Fortis, one of the country’s largest gas and electric utility companies, benefits from its supplies being classified as necessities for people who would require its services regardless of market conditions. As a result of its defensive appeal and lucrative business model, Fortis can be considered one of the top picks in the present market.

Besides, the company is also a perfect blue-chip Canadian dividend aristocrat that has provided reliable dividend payouts yearly to its investors. The blue-chip Canadian stock comes with a yield of 3.16% and is an ideal pick for those investors who have wanted to build a stream of passive income. Notably, Fortis has continuously increased its dividend payouts over the past 48 years and is thus rightly honored as the second-longest active dividend-growth streak in the country. 

Also, the stock has gained over 380% in the last 20 years, thus making itself an attractive bait for long-term investors.

3. Algonquin

Algonquin Power & Utilities Corp is renewable energy and regulated utility company with a portfolio of regulated and non-regulated assets across the United States, Canada, Chile, and the Bermuda region. It operates across the Regulated Services and Renewable Energy segments and serves approximately 1.2 million customers. 

Algonquin’s low-risk utility business model provides it with steady cash flows. Nearly 82% of the company’s output is sold under long-term contracts. Therefore, even in extreme economic conditions, the blue-chip Canadian stock remains less volatile. For instance, in the current year, when situations like decade-high inflation levels or adverse geopolitical conditions were pulling down the performances of most of the growth stocks, Algonquin could gain close to 2.5% instead.

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Moreover, Algonquin’s financials in recent times were quite solid as well. The company reported its numbers for Q2 2022. Its revenue and adjusted net earnings grew by 18% and 19.6%, respectively, compared to last year. Cash from operating activities has grown to $268.6 million depicting a massive 160% year-over-year increment.

4. Metro

Metro is a food retailing company that is the country’s third largest grocer after Loblaw Companies Limited and Sobeys. The company operates as a retailer, franchisor, distributor, and manufacturer in the country’s food and pharmaceutical sectors, and through its 900 groceries and 650 drugstores serves the necessities of a large number of people.

Metro had immensely enjoyed the period of severe food price inflation in Canada, earning more than 7% in the last six months. So, when compared to the broader market, the company’s growth has been relatively terrific. Moreover, the nature of operations of Metro suggests the company is recession resistant as well. As it operates grocery and drugstore locations across multiple areas and its offerings are such that it will never face a shortage of demand in the market, the company may be one of the last to feel the recessionary pressure.

Moreover, despite the weaker market conditions, Metro’s latest financials have been quite good. The company’s quarterly revenue witnessed a 2.5% year-over-year increment to $5.9 billion, even though consumer spending has been relatively down. Further, being a blue-chip Canadian dividend aristocrat is excellent for the portfolios of investors seeking passive income. Remarkably, Metro has successfully raised its distribution in the past 26 years.

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