The stock market has risks, but investors can counter them by limiting holdings to blue-chip stocks. In today's business atmosphere and investment landscape, Canadians have three quality options for capital protection, money growth, and higher long-term results.
Low-risk, utility-like business
TC Energy (TSX:TRP) continues to beat the broad market year-to-date, up 22% versus 11.1%. If you invest today ($60.89 per share), you can partake in the hefty 6.3% dividend. The $63.2 billion pipeline operator will soon be a stand-alone natural gas and energy solutions company.
The Board approved the spin-off of the pipelines business to a new public entity, South Bow. TC Energy will maintain and operate the regulated, low-risk, utility-like natural gas and power businesses with long-term energy fundamentals. The utility business will offer competitive services to meet growing energy demand and generate sustainable cash flow.
Industry champion
Alimentation Couche-Tard (TSX:ATD) is a popular TSX stock and the convenience store industry champion carrying three iconic brands (Couche-Tard, Circle K, and Ingo). Despite economic uncertainties, the $74.9 billion company displayed consistent profitability in the last four years.
In fiscal 2024 (12 months ending April 30, 2024), net earnings declined 11.6% year-over-year to US$3.1 billion. Its President, CEO, and Director, Brian Hannasch, said persistent inflation hounded consumers in the fourth quarter. However, he believes the situation is transitory and remains optimistic about the business.
Meanwhile, expansion via strategic acquisitions is ongoing. The company signed a definitive agreement to acquire Giant Eagle's GetGo Café +Markets (GetGo), a food-first convenience store in the U.S. with 270 desirable locations.
On August 22, 2024, it offered to buy i Holdings, the parent company of 7-Eleven. Alimentation Couche-Tard could become the world's biggest convenience store company if the deal happens. At $78.27 per share, ATD is up 15.1% from a year ago and pays a modest 0.9% dividend.
Profitable growth opportunities
CGI (TSX:GIB.A) has turned the corner since trading at a discount in May. At $147.94 per share, this Canadian tech stock is up 4.3% year-to-date, thanks to an expanding client base, new partnerships, and AI-powered software. The $24.8 billion global IT and business consulting services firm is also a fixture in the U.S. federal contracting industry.
"Through CGI's portfolio of end-to-end service offerings, which are designed to deliver tangible and trusted business outcomes, we continue to partner with clients to bring value now and to position CGI for future profitable growth opportunities," said George D. Schindler, President and CEO of CGI.
In the first nine months of 2024, total revenue and net earnings increased 2.1% and 5.4% year-over-year to $11 billion and $1.3 billion, respectively. Notably, net debt declined 18.7% to $1.8 billion from a year ago. As of June 30, 2024, the total backlog was $27.6 billion. Because of strong earnings and robust cash flow in Q3 2024, CGI announced its first-ever quarterly dividend ($0.15 per share).
CGI has an existing 10-year, $380 million strategic partnership with Circle K of Alimentation Couche-Tard to support digital transformation. On August 6, 2024, its subsidiary, CGI Federal, secured a two-year, US$378 million contract extension with the U.S. State Department for passport application processing services.
Peace of mind
Blue-chip stocks offer peace of mind first and foremost. TC Energy, Alimentation Couche-Tard, and CGI Inc. have billions in market cap and are dependable income sources, whether through capital gains or dividends.
