5 Core Blue Chip Dividend Stocks

At any point in your investing journey, you should identify what your core dividend stocks are as they represent the building blocks for your long-term success.

Rarely do we just hold 5 stocks in a portfolio, we probably reach at least 10, 20 or even 40 stocks at some point. Failure to identify the core holdings for your portfolio as early as possible will probably create more fluctuations in your holdings than necessary. The fluctuations will cause unnecessary expenses and potential missed opportunities.

I will outline my 5 core holdings but I have also asked my readers what they believe their core holdings are and I am sharing the results further down.

What is a Core Dividend Stock?

We need to first identify what a core dividend stock, or holding, is to be able to select one. My definition is defined as:

  • An investment that you can hold forever
  • An investment you can always add money to and feel confident it will pay back in time
  • A business that has been time-tested
  • An investment you want to hold through in retirement

5 Core Blue Chip Dividend Stocks

My core dividend blue chip stocks were not the stocks I started with. It took some time to establish my core holdings and it evolved as I evolved my dividend investing strategy.

Royal Bank of Canada

RY - Royal BankRoyal Bank is a diversified financial services company offering personal and commercial banking, wealth management, insurance, investor services, and capital markets products and services. It is one of Canada's largest banks. Royal Bank also ranks amongst the largest banks in the world based on market capitalization. It serves 16 million clients in Canada, the U.S., and 34 other countries. By geography, Canada is its largest market accounting for 61% of revenues, followed by the US (23%) and other countries (16%). Royal Bank has a large set of diversified customers ranging from corporate and institutional to high net worth clients. The bank has five business segments - personal & commercial banking (49% of earnings), capital markets (21%), wealth management (18%), insurance (7%) and investor & treasury services (5%). It maintains a good balance of assets having nearly 50% retail and 50% institutional assets. Royal Bank operates through the largest financial distribution and branch network in Canada along with leading client franchises.
Investment Data

Toronto Dominion

TD - SmallToronto Dominion Bank is a leading Canadian bank providing banking products and services in Canada and the US. It is the fifth largest bank in North America by total assets. The bank was formed as a result of amalgamation of The Bank of Toronto and The Dominion Bank in 1955. Retail earnings accounts for more than 90% of TD Bank’s total earnings. The bank operates through three business segments: Canadian retail banking (53% of latest income), U.S. retail banking (47%) and wholesale banking. TD Bank offers a wide range of retail, small business and commercial banking products and services to more than 25 million customers worldwide and almost 13 million digital customers. Toronto Dominion bank operates through more than 1,250 locations along the Northeast, Mid-Atlantic, Metro DC, the Carolinas and Florida. It enjoys #1 or #2 market share positions for most of its retail products in Canada. The bank operates in four of the top ten metropolitan areas and seven of the ten wealthiest states in the U.S.

Investment Data

Telus

TSE:TTELUS Corp. is a leading telecom company in Canada. It is the second largest in Canada and provides a wide range of communications products and services such as data, IP, voice, television, entertainment, and video. It is also Canada's largest healthcare IT provider. TELUS has a strong presence in the personal, business and healthcare segments which provides a diversified stream of income. Wireless is the larger segment accounting for 57% of total revenue while the wireline segment constitutes the remaining 43%.

The company has industry leading wireless churn rates of below 1%. TELUS serves more than 13 million customer connections, including 8.9 million wireless subscribers, 1.7 million Internet subscribers, 1.3 million residential network access lines and 1.1 million TELUS TV customers. TELUS Corporation is a leading network provider catering to 99% of Canadians. The company generates recurring monthly fees from its subscribers, which are growing in number, and is well positioned to benefit from a growing appetite for data.

Investment Data

Enbridge

ENB - Enbridge Enbridge exists to fuel people's quality of life and has done so for more than 65 years. A North American leader in delivering energy, Enbridge has been ranked on the Global 100 Most Sustainable Corporations index for the past eight years. Enbridge operates the world's longest crude oil and liquids transportation system and is a North American leader in the gathering, transportation, processing and storage of natural gas.

Enbridge is Canada's largest natural gas distribution provider, with about 3.6 million retail customers in Ontario, Quebec, New Brunswick and New York State. Enbridge has interests in nearly 3,000 MW of net renewable generation and power transmission capacity, based on projects in operation or under construction, and continues to expand into wind, solar and geothermal power.

Investment Data

Canadian National Railway

CNR - Canadian National RailwayCanadian National Railway is a leading transportation and logistics company in North America. The company owns the only transcontinental railway line in North America and provides intermodal, trucking, freight forwarding, warehousing and distribution services. As North America’s leading supply chain player, Canadian National Railway carries more than 300 million tons of cargo annually. It is a fully integrated rail and transportation services company and is the top mover of aluminum, iron ore and base metal ore in North America. Canadian National handles over 50% of all Canadian chemicals production and services the three major petrochemical centers in North America. Its product portfolio is well diversified with intermodal accounting for 25% of revenues, followed by petroleum & chemicals, and grains & fertilizers each at 17%. Forest products, metal, minerals, automotives, etc. constitute the remainder. The company transports goods worth more than $250 billion annually for a wide range of business sectors, ranging from resource products to manufactured products to consumer goods.

Investment Data

Diversification of Core Dividend Stocks

It is important to consider diversification of sectors but with 5 stocks, you will not cover all of your bases. Even less if you take more than one in a specific sector as I did. The number of stocks in a dividend income portfolio needed for full diversification should be larger than 5 so you may want to decide on how many core holdings you want.

As a Canadian, the financial sector can be a no-brainer followed by the energy sector and utilities. After that, the picking is slim. As an American, there is a breadth of options and the top 10 US stocks below already provide a broad diversification. As a Canadian, I could not envision building a Canadian only portfolio and miss on the US core holdings.

Reader’s Top 10 Core Holdings

The reader’s picks are broken down by the top 10 Canadian and US stocks.

Canadian Dividend Stocks

  1. TD Bank TSE:TDNYSE:TD – Financial Services
  2. BCE TSE:BCENYSE:BCECommunication Services
  3. Royal Bank of Canada – Financial Services
  4. Fortis TSE:FTSUtilities
  5. Bank of Nova Scotia TSE:BNSNYSE:BNS – Financial Services
  6. Enbridge TSE:ENBNYSE:ENBEnergy
  7. Telus TSE:TNYSE:TUCommunication Services
  8. Bank of Montreal TSE:BMONYSE:BMO – Financial Services
  9. Canadian National Railway TSE:CNRNYSE:CNI – Industrials
  10. TC Energy TSE:TRPNYSE:TRPEnergy

US Dividend Stocks

  1. Johnson & Johnson NYSE:JNJ – Healthcare
  2. Microsoft NASDAQ:MSFT – Technology
  3. Exxon Mobile CorpNYSE:XOM – Energy
  4. AT&TNYSE:T – Communication Services
  5. Procter & Gamble NYSE:PG – Consumer Defensive
  6. IBM NYSE:IBM – Technology
  7. Apple NASDAQ:AAPL – Technology
  8. Berkshire Hathaway Inc (NYSE:BRK.B) – Financial Services
  9. Coca-Cola NYSE:KO – Consumer Defensive
  10. 3M NYSE:MMM – Industrials

As you may also conclude, the big difference between the 2 lists is the sector diversification. The US list is much more diversified by sector whereas the Canadian list is heavy on Canadian banks. Each list ends up complementing each other in a way and that’s why I hold many stocks from both lists. See my full list of holdings.

A total of 110 stocks were listed by the readers and the above two lists represent the most popular. Out of the 110 stocks, 51 are US stocks, 2 are from the London Stock Exchange and the remaining from the Toronto Stock exchange. I will admit that some core holdings were a little surprising. Either the core holding term is not clear or some investors’ perception of their stock selection as a core holding is overstated.

Nevertheless, as I mentioned, Canadians love their banks and one reader picked all the banks. Not a bad selection and very conservative. Surprisingly, I have also seen Canadian Western Bank TSE:CWB in the list which has more exposure to the oil sector than the other banks. On the other hand, I was pleasantly surprised to see Canadians picking US stocks amongst their Canadian stock picks. It’s also worth noting that a number of utilities and REITs made the list which definitely provides consistent income from investment but usually lacks the growth expected in core holdings – or is it expected?

DISCLOSURE: Please note that I may have a position in one or many of the holdings listed. For a complete list of my holdings, please see my Dividend Portfolio.

Join 5,500+ Investors & Build a Winning Portfolio