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The Canadian market has shown resilience as it recovers from the economic turbulence brought on by the pandemic. The first half of 2023 has seen impressive results from key companies, surpassing analysts' expectations. Nevertheless, market uncertainties persist, such as rising interest rates, which can pose challenges to bullish momentum. In these uncertain times, investing in TSX blue-chip stocks with strong market positions, attractive valuations, and a track record of consistent and quality performance is a prudent choice. Here are three such Canadian blue-chip stocks to consider for your portfolio in October 2023.
Royal Bank of Canada (TSX:RY)
Royal Bank of Canada, commonly known as RBC, stands as the largest bank in Canada and offers a promising investment opportunity. With a current dividend yield of 4.4% and an illustrious dividend history dating back to 1870, TSX RY exhibits substantial long-term upside potential.
RBC has maintained a consistent dividend-payout ratio of approximately 46.6%, which signifies financial stability and room for further expansion. In the quarter ending July 31, 2023, RBC reported net income of $3.9 billion, marking a remarkable 8% increase over the previous year. These factors, coupled with a reasonable valuation, render RBC an appealing choice for investors.
Telus (TSX:T)
Telus, a prominent telecommunications company, has seen its share price decline by 36% due to volatile interest rates and concerns about a potential recession. Despite offering a high dividend yield of 6.6%, its price-to-earnings ratio stands at 26.9 times, which presents relatively strong value when compared to its historical average.
Moreover, TSX T is poised for future growth with its exposure to emerging 5G technology. Currently trading below $25 per share, Telus generates substantial revenue from basic mobile and Internet services. The company anticipates 9.5% revenue growth and 7% earnings before interest, taxes, depreciation, and amortization growth. Investors can reap the benefits of a 6.5% dividend yield at the current price.
Canadian National Railway (TSX:CNR)
Canadian National Railway, North America's leading specialty rail transportation company, plays a crucial role in facilitating trade between Canada and the United States.
Shareholders recently received a quarterly dividend of $0.5996 per share, resulting in an annual dividend of $2.40 per share and a yield of 2.26%. This represents an increase from the company's previous dividend payout of $0.58 per share.
Canadian National Railway boasts a dividend-payout ratio of 39.73%, demonstrating its commitment to distributing profits to shareholders. Analyst consensus indicates a continued payout of approximately 38% of earnings over the next three years, along with a consistent return on equity of 30%.
Conclusion
These established blue-chip companies have a history of quality dividend payments and growth, making them secure investments in the current market environment characterized by rising interest rates. As prudent investors are well aware, these stocks are safe bets in uncertain times, offering the potential for stable returns and dividend income.
In October 2023, consider adding Royal Bank of Canada, Telus, and Canadian National Railway to your investment portfolio as resilient options to navigate the evolving market landscape
