Dividend-Growth Investors: Is Suncor Energy Inc. or Bank of Montreal a Better Bet Today?

Suncor Energy Inc. (TSX:SU)(NYSE:SU) and Bank of Montreal (TSX:BMO)(NYSE:BMO) both have strong dividend-growth track records.

| More on:
The Motley Fool

Dividend investors are searching for top names to add to their holdings.

Let’s take a look at Suncor Energy Inc. (TSX:SU)(NYSE:SU) and Bank of Montreal (TSX:BMO)(NYSE:BMO) to see if one should be in your portfolio.

Suncor

Suncor is Canada’s largest integrated energy company with oil sands, refining, and marketing assets.

The balanced nature of the revenue stream has helped the company navigate through the oil rout in pretty good shape, and management has taken advantage of the downturn to invest for the future.

Suncor purchased Canadian Oil Sands after a hard-fought battle that gave the company a majority position in Syncrude.

Suncor also raised its stake in the Fort Hills oil sands development and now owns 51% of the project, which is scheduled to begin production later this year.

Cash operating costs fell from $28 per barrel in Q4 2015 to $24.95 per barrel in Q4 last year, so management is making good progress on efforts to improve production efficiency.

The company’s oil sands assets get most of the attention, but Suncor also owns four refineries and more than 1,500 retail outlets that provide a nice hedge against difficult times in the upstream segment.

The balance sheet remains in good shape, and the company recently raised the dividend by 10%. Volatility might continue in the energy sector, but the distribution should be safe.

Suncor currently provides a yield of 3.1%.

Bank of Montreal

Investors often overlook Bank of Montreal when searching for a bank stock, but that could be a mistake.

The company has a balanced revenue stream, supported by strong personal and commercial operations, wealth management services, and capital markets activities.

Bank of Montreal also has an impressive U.S. presence with nearly 500 branches primarily located in the Mid-West.

The American operations are doing well and provide some protection against any weakness that could be on the horizon in the Canadian market.

Bank of Montreal has paid a dividend every year since 1829, and raises the distribution on a regular basis. The payout offers a yield of 3.6% today.

Is one a better bet?

Both stocks have proven track records of dividend growth and are solid picks in their respective industries, so the decision really comes down to your view on oil.

If you believe oil prices are in recovery mode, Suncor probably offers higher dividend-growth prospects over the medium term.

If you don’t like oil’s prospects, Bank of Montreal might be a better bet.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

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

More on Dividend Stocks

You Should Know This
Dividend Stocks

How to Convert a $300 Monthly Investment Into $338 in Monthly Income

If you want a certain amount in monthly passive income, invest a similar amount today and leave the rest to…

Read more »

Increasing yield
Dividend Stocks

3 Income Stocks With Big Yields to Consider in April 2024

If you haven’t yet made your March investments, here are three income stocks to buy the dip and lock in…

Read more »

Senior Man Sitting On Sofa At Home With Pet Labrador Dog
Dividend Stocks

RRSP Investors: Don’t Miss Out on This Contribution Hack!

This hack has so many benefits for you -- not just when you put it in your RRSP but for…

Read more »

A red umbrella stands higher than a crowd of black umbrellas.
Dividend Stocks

Passive Income: 2 Safe Dividend Stocks to Own for the Next 10 Years

Dividend stocks such as Manulife and Fortis can help you generate a stable and recurring passive-income stream.

Read more »

Young woman sat at laptop by a window
Dividend Stocks

3 Dividend Stocks Everyone Should Own for the Long Haul

For investors looking for top-tier dividend stocks to buy and hold for the long term, here are three of my…

Read more »

Payday ringed on a calendar
Dividend Stocks

3 Dividend Stocks That Pay Me More Than $54.57 Per Month

These three dividend stocks have done me well over the years, so let's look at how much I've gotten in…

Read more »

Golden crown on a red velvet background
Dividend Stocks

Dividend Royalty: 3 Fabulous Stocks to Buy Now for Decades of Passive Income

Rogers Communications stock and Canadian Natural Resources stock could pay you dividends for decades to come.

Read more »

Dividend Stocks

The Top Canadian REITs to Buy in April 2024

For growth and dividends this April, look to these two REITs that have quite the promising present as well as…

Read more »