Written by Joey Frenette at The Motley Fool Canada
Canadian blue-chip stocks are reliable and make for great first stocks for new investors looking to break into the investment world. Indeed, blue-chip stocks may not offer as much upside potential as the likes of some of the high-flying small- and mid-cap plays in the market.
That said, they tend to offer a magnitude of stability and a decent enough return profile to keep new investors from being “frightened” out of the market. How many times have you heard a beginner investor “giving up” because they decided to place too large a bet on some cannabis stock when they were heating up a few years ago?
Indeed, the same can be said for cryptocurrencies and other high-flyers that many new investors may have lost considerable sums in. For this piece, we’ll keep it short and simple with two blue-chip stocks that make for great core holdings in a portfolio.
Though I’m not a huge advocate of diversification (rather, I’d much prefer you allocate more funds towards your best ideas), I think it’s a very useful way to keep out of trouble if you’re brand new to financial markets. For market newcomers, diversification, I believe, is very wise. In a way, it can act like training wheels, helping to save you from big trouble should one of your big investment ideas slip up.
Without further ado, let’s check out two cheap blue chips I’d look to pick up this December 2023.
Sun Life Financial
Sun Life Financial (TSX:SLF) is a life insurance and asset management play that recently spiked more than 12% since its October lows. Undoubtedly, the latest round of quarterly earnings results were more than impressive, helping fuel a nice recovery bounce in the stock. Though things looked dark for the firm in September and October, it’s clear that things are looking bright going into the end of the year as more investors digest that delicious quarter.
Though the U.S. market is still a sore spot, wealth and asset management got a jolt from higher fees. Even after the recent stock surge, I view shares as a bargain, as they go for 11.1 times trailing price to earnings (P/E). The 4.46% dividend yield also looks bountiful as the company looks to continue its recovery going into what could be a brighter 2024.
TD Bank (TSX:TD) is a Canadian bank stock that’s showing signs of life, recently surging over 9% from its October (and multi-year) lows. Indeed, the coast isn’t clear just yet as the insanely well-capitalized bank navigates into a new year.
The valuation seems modest at 10.75 times trailing P/E. And the 4.6% dividend yield, while bountiful, is not the largest of the Big Six group. Indeed, you could get a cheaper, higher-yielding bank elsewhere, but in terms of quality for the price, I view TD as a wonderful value play right now. Only time will tell when TD’s fortunes turn. I think the recent run could be the start of something special, even if the outlook remains a bit hazy.
Before you consider Sun Life Financial, you'll want to hear this.
Our market-beating analyst team just revealed what they believe are the 5 best stocks for investors to buy in November 2023... and Sun Life Financial wasn't on the list.
The online investing service they've run for nearly a decade, Motley Fool Stock Advisor Canada, is beating the TSX by 24 percentage points. And right now, they think there are 5 stocks that are better buys.
See the 5 Stocks * Returns as of 11/14/23