10 of the Best Blue Chip Canadian Stocks to Buy in February 2023

Posted on February 2, 2023 by Dylan Callaghan

When investors think of blue chip Canadian stocks, they often think of some of the best Canadian dividend stocks. However, this isn't necessarily the case.

What are Canadian blue chip stocks?

Our definition of a blue chip stock is simply one that has a large market capitalization and is a top company in its industry.

Typically I look for high quality stocks that are within the top three in terms of performance in the sector, but industries like Canadian banking can have a multitude of stocks I consider blue chip even if they aren't a front runner.

Blue chip stocks are often the backbone of an investors portfolio, and are held for the long term. Investors, especially those just learning how to buy stocks in Canada, should make high quality blue-chip stocks their primary focus.

They provide long term stability and usually (but not always like I stated above) an excellent dividend.

Why is that?

Well, a "blue-chip" stock is often well established and has been financially sound for decades. This differs from growth stocks, as an investment in them is often banking on the growth potential of the company, not its previous results and can have extensive swings in price over the long term.

An interesting piece of information before we move on to the best blue chips stocks in Canada though.

Did you know that the term blue chip, when it comes to the stock market, is derived from the game of poker? 

Typically, blue chips held the highest value, and as such were the most important to hold in your stack.

With all that said, here is a list of high quality Canadian blue chip stocks you need to be looking at in 2023.

The list is dominated by energy, financial and railroad companies, but this is to be expected as they take up a large majority of the TSX.

What are the 10 best Canadian blue chip stocks?

  • Brookfield Corporation (TSE:BN)
  • TC Energy (TSE:TRP)
  • Canadian Pacific Railway (TSE:CP)
  • Canadian Apartment REIT (TSE:CAR.UN)
  • BCE Inc (TSE:BCE)
  • Metro (TSE:MRU)
  • Constellation Software (TSE:CSU)
  • Canadian National Railway (TSE:CNR)
  • Royal Bank of Canada (TSE:RY)
  • Fortis (TSE:FTS)


10. Brookfield Asset Management (TSE:BAM.A)

Prior to the end of 2022, Brookfield Corporation was referred to as Brookfield Asset Management. However, the company performed a spinoff of its asset management business, and now calls itself Brookfield Corporation. Its business structure is quite complex, and many beginner investors don't know where to start.

This is because Brookfield has a multitude of subsidiaries, ones that investors can purchase on their own. In fact, we often called the old BAM.A the "ETF" of Brookfield companies. Now, Brookfield Corporation (BN) takes its place.

 This is because Brookfield Corporation contains exposure to the real estate, infrastructure, private equity, data centers, and even renewable energy sectors.

But investors can instead purchase a subsidiary of the company like Brookfield Renewable Partners (BEP.UN) to get exposure to its renewable energy assets or Brookfield Infrastructure Partners (BIP.UN) to gain exposure to its utility, transport and energy assets, among others. And as mentioned, they can now gain access to Brookfield Asset Management under the ticker BAM.

So, why buy Brookfield Corporation instead? It yields less, and is growing slower than a company like Brookfield Renewable Partners? Well, the simple answer to this is you want exposure to all of the company's assets, and instead of seeking out a higher yield, you instead want overall returns.

The company's assets are primarily located in the United States and Canada, but it does have exposure in both Brazil and Australia as well. With a market cap in excess of $70B, this is one of the largest companies in the country and is certainly worthy of its blue-chip title.

Brookfield is a Canadian staple and has consistently rewarded shareholders with market-beating growth. This is due to outstanding management and operating performance.

Although many investors will not be seeking out BN for its dividend as it yields just over 1%, it does have a 10 year dividend growth streak, making it a Canadian Dividend Aristocrat and it has grown that dividend at a high single-digit pace (7.5%) over the last half decade. This growth rate may change in light of the spinoff, but it will be something we need to keep an eye on.

9. TC Energy (TSX:TRP)

The oil & gas industry was decimated in 2020. However, we're now seeing it recover and Canadian investors are looking for blue-chip stocks to gain exposure.

And in our opinion, you may be wise to avoid producers and stick to pipelines. Why? Whether it be TC Energy (TSX:TRP), Pembina Pipeline (TSE:PPL), or Enbridge (TSX:ENB), these are companies that transport various commodities. They are less susceptible to damage due to fluctuations in the price of oil.

One of the best in the industry is TC Energy (formerly TransCanada). The company was the best performing pipeline by quite a wide distance in 2020 up until the end of the year when the rumored and eventual confirmation of the cancellation of the Keystone XL.

However, the company has plenty of growth projects, and we don't view the cancellation as an issue at all. In terms of the pandemic, TC Energy didn't face any significant impacts. In fact, the company stated:

“Despite the challenges brought about by COVID-19, our assets have been largely unimpacted”

This just goes to show if there were to be another pandemic or large hit to the price of oil, TC Energy would likely be unimpacted yet again.

The company has critical infrastructure across North America and it expects to spend $37 billion on growth projects through 2023. The majority of which will be spent on natural gas pipelines.

The company aims to grow the dividend in the mid-single digit range and has set aside a significant amount of capital for expanding infrastructure. This should secure the long-term safety of the dividend.

If you are looking for a best-in-class energy company, TC Energy certainly fits the bill. It is trading at cheap valuations, the company’s juicy dividend yield is well covered, and it has a robust pipeline of growth projects.

This isn't a blue-chip Canadian stock that is going to blow you away with outstanding returns. But, it's going to provide a consistent growing passive income stream.

8. Canadian Pacific Railroad (TSX:CP)

Railroads are the bellwether for economic activity, and Canadian Pacific Railway (TSX:CP) has made a dramatic move forward.

Pre-2012, the company was having significant operational issues which led to many tough decisions. The turnaround has been nothing short of astounding. Over the past five years, it has outperformed its larger peer (CN Rail) and it transformed itself from the lowest-margin railroad to the highest of all publicly listed North American railroads.

With its operational issues in the rear-view mirror, the railroad has returned to dividend growth.

In July 2020, the company extended its dividend-growth streak to five years when it raised the dividend by 15%. It was a notable raise as it became a Canadian Dividend Aristocrat. Now, its dividend growth streak sits at 6 years and over the course of the streak, it has consistently raised the dividend by double-digits.

The company's growth actually has a chance to accelerate, as CP Rail became the winner of the Kansas City Southern dispute.

Yes, the railways have a chance to dip depending on the likelihood of an upcoming recession. However, despite this, analysts figure the company will be able to grow earnings at a double-digit rate well into 2025.

There isn’t much not to like about CP Rail. It forms a duopoly with CN Rail, and rail is the primary means of transporting goods across the country. It is also proving to be a strong defensive stock despite severe economic uncertainty.

It recently underwent a share split and is also more attractive to retail investors who couldn't afford the lofty $400+ price tag it used to trade at.

7. Canadian Apartment Properties REIT (TSX:CAR.UN)

You might be thinking, how can a REIT make a list of blue chip Canadian stocks in light of the current rising rate environment? Let us explain.

Although the sector as a whole is under pressure, there are certain industries that are more stable than others – that includes those that operate multi-unit residential properties.

Although there are better performing names in this area, Canadian Apartment Properties (CAP) REIT (TSX:CAR.UN) provides excellent value here.

 It has a suite of affordable rent portfolios that is proving to be quite resilient.

CAP REIT is also in strong financial shape. It has a debt-to-gross book value below 36% (a rate below 50% is considered strong), one of the lowest in the industry.

Furthermore, the company’s mid 3% dividend yield is well covered, accounting for only 65% of funds from operations. Once again, this is in the top tier of TSX-listed REITs.

The company is currently trading at a double digit discount to its net asset value, and around 18 times funds from operations. In June of 2020, the company was added to the S&P/TSX 60 Composite Index which tracks the largest companies by market cap on the TSX Index. In fact, it is the only REIT among the Index constituents.

Although it does carry greater risk than most on this list, the risk-to-reward proposition is attractive. Now is the perfect time to start accumulating Canada’s largest residential REIT despite overall real estate fears.

6. BCE Inc (TSX:BCE)

BCE Inc (TSX:BCE) is one of the largest telecom companies in the country and is often grouped together with the "Big 3", being Telus, Rogers, and BCE.

In terms of  blue chip stocks, you can't really go wrong with any of the three, but what sets BCE apart is its ability to generate new subscribers in a mature market, and its sheer size.

The company's strength is product innovation and providing the fastest network possible to Canadians.

Its success in this department is reflected in a customer base that exceeds 9 million subscribers.

The company states that 99% of Canadians have the ability to gain access to BCE's services, which is an industry leader in terms of coverage. This is exactly why it deserves the title of blue-chip stock over its counterparts Rogers and Telus.

Don't get us wrong though, all 3 are outstanding companies. Why?

The Canadian telecom industry is somewhat of a regulated monopoly. The three big players dominate the industry and the regulations make this unlikely to change anytime soon.

Canadians pay some of the highest phone and television bills out of all the developed countries, and strict regulations make it nearly impossible for new players to try and penetrate the market.

The one company that was having some success at breaking through is Shaw Communications (TSX:SJR.B), but they were recently acquired (still pending approval) by Rogers.

BCE is one of the best income stocks in the country, with a dividend yield north of 6% and a 13-year dividend growth streak. Although it may seem like a short streak, it was interrupted by an impending purchase by the Ontario Teacher’s plan that ultimately fell through. It would have 20+ straight years of dividend growth if this didn't happen.

With a market capitalization of more than $55B, the company is one of the largest in the country and is a blue chip stock that has provided consistency and reliability for over a decade.

Although it may not provide the best growth out of the Big 3, it has the widest reach across the country and commands the title of blue-chip Canadian stock when it comes to telecommunications.

5. Metro (TSX:MRU)

A quick look over the sectors in 2022 and you will find only two that have consistently been among the top performers – consumer staples and energy.

Not surprisingly, as the economy shut down, we still needed our basic necessities and this sector remained strong, particularly among grocery stocks. One of the country’s best is Metro (TSX:MRU).

A quick look at its long term chart will tell you everything you need to know. Metro is a pillar of consistency. Nothing flashy here, just consistent and reliable growth. The company’s low yield may be a turn-off for some, but it is one of the best dividend growth stocks in the country.

Metro’s 27-year dividend growth streak is tied for the 7th-longest streak in the country and it is one of the few in the leading 10 to have consistently raised by double-digits over the past three, five, and ten-year periods.

Even in a post-pandemic and post-shutdown environment, it is clear that consumer activity and purchasing habits have changed forever. It's likely that Metro could see less foot traffic through its doors, but a higher amount of volume per purchase as consumers have learned over the pandemic to shop more efficiently.

Another habit? E-commerce. And this is a space that Metro is growing in rapidly. In fact, the company's online sales are seeing triple digit year over year growth.

This growth is likely to slow as the pandemic subsides, but there is no question that consumer habits have changed and some will make a permanent shift to e-commerce ordering due to convenience. As a result, we'd still expect significant growth in the company's online sales moving forward.

And finally, in periods of rising inflation, a company like Metro has the chance to outperform. Consumer defensive stocks like Metro tend to outperform pure-growth plays in rising rate & inflationary environments like we are in right now.

4. Constellation Software (TSX:CSU)

Although it is starting to make headway, the technology sector is still under-represented on the TSX Index. Unlike south of the border where tech makes up almost a quarter of the markets, the sector still accounts for only a single-digit weighting on the TSX Index.

This is up notably from the 3% it accounted for half a decade ago, yet there is arguably only one company that could qualify to be a true blue chip Canadian stock.

And that is Constellation Software (TSX:CSU). Constellation is one of the best-managed companies on the TSX Index.

Over the past ten years, its stock price has soared by over 1800% and it has one of the best track records in the industry. It pays an almost non-existent dividend. However, that is intentional, as this company is an acquisition machine and chooses to reinvest company cash flow instead.

A $10,000 investment in the company 10-years ago would be worth over $187,000 at the time of writing – and this is without commanding some of the crazy valuations of today’s high-growth tech stocks.

Constellation is simply put, the best consolidator in the industry. It has a knack for acquiring companies and seamlessly bringing them into the fold. It is also important to recognize that tech is becoming a defensive play in this new environment.

Despite the company being a technology stock, it is performing nearly inline with most major indexes and is one of the best-performing Canadian technology companies in this current bear market.

It is however, a company that requires full trust in management. It does not hold quarterly conference calls, and only provides an annual letter to shareholders. You are putting your trust in management, and thus far, it has proven to be a winning proposition.

It also has a high share price, frequently trading in the $2100+ range. This does make it extremely hard for beginner investors with a small portfolio to purchase the stock. If you only have $5,000 or $10,000 to start out with, it presents somewhat of a concentration risk.

Fractional shares on a platform like Wealthsimple, or a potential share split, could make Constellation more attractive to those just starting out.

3. Canadian National Railway (TSX:CNR)

Canadian National Railway (TSX:CNR) is the largest railway company in Canada, and as such has become a no-brainer when referencing the top blue-chip stocks here in Canada.

With over 33,000 kilometers of track, CN Rail is engaged in the transportation of forest, grain, coal, sulfur, fertilizer, automotive parts, and more.

CN Rail is a company that is growing its dividend at an impressive pace.

It has a dividend growth streak of 26 years and a five-year dividend growth rate of 10.9%. The stock's consistent rise in price however has resulted in a low yield.

Don’t fret. The company may lack in yield, but it makes up for that in capital appreciation. Over the past decade, it has returned more than 261% to investors. This type of performance out of a large cap, blue chip company is quite impressive.

Simply put, CP Rail and CN Rail are some of the best railways in North America, which is why they're both on this list. In fact, they're the only sector that features two companies on this list, that is how strong they are.

Prior to the Kansas City Southern fiasco last year, CN Rail had been performing exceptionally well. And, now that things seem to be settling in terms of that deal, it's starting to get back to its outstanding performance despite recessionary fears and a large-scale correction in the equity markets. Even in a recessionary environment, we can expect cash flow to be relatively consistent. CN Rail moves a lot of critical material across the country.

Moving on, despite its size, CN Rail has been able to adapt, re-route and focus operations on those customers that ran essential services.

The company’s handling of the pandemic has been rightfully lauded by industry experts. Investors are in good hands with CN Rail, and the short-term negative sentiment due to a potential recession will be short-lived in our opinion.

Right now, Canada's railways look expensive. However, they've always looked expensive. If you're looking to add, timing the market on either CN or CP Rail will likely be a wasted effort. Just scoop them up and tuck them into the core holdings of your portfolio.

2. Royal Bank of Canada (TSX:RY)

The Royal Bank of Canada (TSX:RY) is probably one of the most popular stocks here in Canada.

The company is a global enterprise, with operations in Canada, the United States, and nearly 40 other countries.

The company has been named one of Canada's most valuable brands for 6 years running, and its reputation is second to none in terms of customer satisfaction.

With a market capitalization of nearly $180B, Royal Bank is one of the best Blue Chip stocks to add to your portfolio today.

The company's dividend is strong, with a yield typically in the high 3% range and a 11 year dividend growth streak. The dividend is also growing at an impressive pace, with a five-year growth rate of over 6%.

The Canadian banking industry is one of the strongest sectors in the country, if not the world. While banks around the world were slashing dividends and closing their doors during the 2008 financial crisis, all of the Canadian banks held strong. Although their share prices fell considerably, recovery was quick and their dividends were never cut.

Now that the pandemic is behind us, financial institutions like Toronto Dominion Bank, Bank of Montreal, Bank of Nova Scotia, and RBC have been able to raise their dividends. And, they've done just that, despite a looming recession and potential economic uncertainty. This is a testament to how well capitalized they are.

Royal Bank's international exposure and sheer size were brought to light during the COVID-19 pandemic, and it has ended up being one of the more reliable Canadian stocks of the last few years. As such, it's worthy of its blue-chip title.

1. Fortis (TSX:FTS)

You won't find a Blue Chip stock list that doesn't contain Fortis (TSX:FTS) – at least you shouldn’t. If you do, maybe keep looking.

This Canadian company is among the top 15 utilities in North America and has over 10 utility operations under its belt in Canada, the United States, and the Caribbean.

The utility industry is highly regulated, which often leads to consistent cash flows.

As the population keeps growing, energy demands will grow right along with it and utility companies are positioned to profit.

Fortis has the second longest dividend growth streak in the country at 49 years. This has cemented the company as one of the best investments in Canada and definitely worthy of its blue-chip title.

Yielding around 4%, the company has grown the dividend at a 5-year rate of 6.1% with a payout ratio of under 60%. The good news?

Fortis recently extended its targeted annual dividend growth rate of 6% to 2025. That means investors can expect a 6% annual raise to the dividend in each of the next five years. That type of transparency and reliability is rare. It will be interesting to see if this company can hit this guidance with rates increasing as fast as they are.

Utility companies rely heavily on debt to finance capital investments. As such, these companies are prone to setbacks when interest rates rise. This is something you need to keep an eye on if you're looking to invest in a Canadian blue chip stock like Fortis.

However, even if the BoC were to continue to raise rates, Fortis has historically been impacted the least out of all regulated utilities. With a beta of 0.2, the stock trades more like a bond, and its low volatility will prove to be vital if a recession were to hit.

Fortis’ stock is as close to a set-and-forget investment as you can get.

Disclaimer: The writer of this article or employees of Stocktrades Ltd may have positions in securities listed in this article. Stocktrades Ltd may also be compensated via affiliate links in this post. Stocktrades Ltd will run advertisements on our posts. These advertisements do not represent an endorsement by us.

Dylan Callaghan

About the author

Dylan is the co-founder of Stocktrades.ca and an avid self-directed investor. He holds a portfolio of Canadian growth and dividend growth stocks, and believes that anyone, regardless of financial status, stands to benefit from investing in the stock market. His ultimate goal with his writing and the continual development of Stocktrades.ca is to create a resource that helps Canadians, and investors from around the world, make more money and retire earlier.