Many retirees are reliant on investment income to cover the gap between their pensions and their monthly living expenses.

In the past, senior investors could simply buy bonds or GICs and earn enough to meet their needs. Those days are long gone and unlikely to return anytime soon.

This means investors are turning to dividend stocks to provide the required income. Fortunately, some of Canada’s top companies offer safe payouts and attractive yields.

Here are the reasons why I think dividend investors should consider Bank of Montreal (TSX:BMO)(NYSE:BMO) and BCE Inc. (TSX:BCE)(NYSE:BCE).

Bank of Montreal

If you are looking for a company with a long history of returning profits to investors, Bank of Montreal is as good as it gets. In fact, Canada’s oldest bank has paid a dividend every year since 1829.

The company is often overlooked in favour of its larger peers, but Bank of Montreal deserves more respect, especially in the current economic environment.


BMO has a very diversified revenue stream with significant operations outside of Canada.

The company’s U.S. division has 600 branches with more than two million customers located primarily in the U.S. Midwest. As the American economy continues to recover, Bank of Montreal is reaping the rewards through impressive commercial loan growth and the effects of a strengthening U.S. dollar.

Bank of Montreal is also expanding its wealth management business overseas, with a significant presence in Europe.

The company pays a dividend of $3.28 per share that yields 4.6%. Investors are also getting a value play because the stock currently trades at an attractive 10.2 times forward earnings and just 1.4 times book value.

BCE Inc.

Retirees have always loved BCE for its stable and generous dividends, and the stock is just as appealing today as it has ever been.

The company is a very different beast from the old wireline telephone company it once was, but the cash flow BCE produces remains the core reason to own the stock.

BCE generates revenue from wireless, wireline, and media operations. The company enjoys adjusted EBITDA margins of 40% and expects free cash flow growth in 2015 to be 8-15%.

BCE recently increased its dividend by 5%. The current payout of $2.60 per share yields about 4.9%, which is pretty attractive for a low-risk investment.

The Canadian economy is going through a rough patch, so income investors should focus on companies that can deliver solid results in tough times. People might start to cut back on their expensive coffees, but they won’t stop using their mobile phones or the Internet.

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Fool contributor Andrew Walker has no position in any stocks mentioned.