Your Instant 3-Stock Dividend Growth Portfolio

Here’s why new investors should pick Bank of Montreal (TSX:BMO)(NYSE:BMO), Shaw Communications Inc. (TSX:SJR.B)(NYSE:SJR), and Potash Corp./Saskatchewan Inc. (TSX: POT)(NYSE: POT) for a dividend growth portfolio.

| More on:

New investors looking to start a diversified dividend growth portfolio should consider Bank of Montreal (TSX: BMO) (NYSE: BMO), Shaw Communications Inc. (TSX: SJR.B) (NYSE: SJR), and Potash Corp./Saskatchewan Inc. (TSX: POT) (NYSE: POT) as their top picks.

When looking for great stocks to launch an investment portfolio, investors want to find companies with proven business models and a history of dividend growth.

Here’s why I think Bank of Montreal, Shaw Communications, and Potash Corp./Saskatchewan are solid choices right now.

Bank of Montreal

Despite being Canada’s oldest bank, Bank of Montreal is often overshadowed by its bigger and more popular competitors. Recently, however, investors have started to pay more attention to the company.

Bank of Montreal is diversifying its operations outside of Canada in order to take advantage of growth opportunities beyond the Canadian retail market. The company is betting heavily on the recovering U.S. economy as it expands its BMO Harris Bank operations in the U.S. Midwest.

It has also decided to grow its profitable wealth management business, recently acquiring F&C Asset Management in the U.K., giving it a strong presence both there and in mainland Europe.

BMO has paid a dividend to its shareholders every year for more than a century. It has increased the dividend four times in the past two years, and the current payout of $3.12 per share yields about 3.7%.

Shaw Communications Inc.

Calgary-based Shaw Communications is a bit unique in Canada’s media and communications industry because it does not have a mobile phone business. While some industry observers think this is a negative, I believe it is a strong reason for investors to buy the stock.

Rather than spending the $1 billion required to battle Rogers, Telus, and BCE in the highly competitive mobile phone market, Shaw has invested instead in the fast-growing Internet storage industry. It recently spent $1.2 billion to buy ViaWest, a data center company. The move positions Shaw well as it expands its technology offerings focused on mid-market companies.

Shaw also has a best-in-class portfolio of media assets that it distributes to its cable customers. It owns the Global Television network, Showcase, HGTV Canada, and History Television, as well as a host of other popular shows.

Finally, Shaw’s latest venture with Rogers is very interesting for investors. If the new Shomi Internet streaming service succeeds in its bid to compete with Netflix, Shaw’s free cash flow could rocket higher in the coming years.

Shaw Communications has a history of increasing its dividend every year. The current distribution is $1.10 per share and yields about 4%.

Potash Corp./Saskatchewan Inc.

New investors looking for a long-term dividend growth stock should add Potash Corp./Saskatchewan to their portfolio.

The company primarily mines and sells one of the core crop nutrients needed by farmers around the world to improve crop yields. As global farmland disappears and the world’s population continues to increase, Potash Corp. will reap the benefits.

Recent weakness in the global potash wholesale market has provided investors with a fantastic opportunity to buy the stock.

Potash Corp. pays its dividend in U.S. dollars and has raised the distribution from $0.28 per share to $1.40 per share in the past three years. The current payout yields about 4%. The company is at the end of a capital-intensive expansion phase, and investors should see even more free cash flow returned to them through higher dividend payouts in the next few years.

If you’re looking to start a position in dividend-paying companies, or are hoping to provide some ballast to your existing portfolio, these three companies are certainly worth a good look.

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.

More on Dividend Stocks

financial freedom sign
Dividend Stocks

Million-Dollar TFSA: 1 Way to Achieve to 7-Figure Wealth

Achieving seven-figure TFSA wealth is doable with two large-cap, high-yield dividend stocks.

Read more »

analyze data
Dividend Stocks

How Much Will Manulife Financial Pay in Dividends This Year?

Manulife stock's dividend should be safe and the stock appears to be fairly valued.

Read more »

food restaurants
Dividend Stocks

Better Stock to Buy Now: Tim Hortons or Starbucks?

Starbucks and Restaurant Brands International are two blue-chip dividend stocks that trade at a discount to consensus price targets.

Read more »

Hand arranging wood block stacking as step stair with arrow up.
Dividend Stocks

1 Growth Stock With Legit Potential to Outperform the Market

Identifying the stocks that have outperformed the market (in the past) is relatively easy, but selecting the ones that will…

Read more »

money cash dividends
Dividend Stocks

Passive Income: The Investment Needed to Yield $1,000 Per Annum

Do you want to generate a juicy passive-income stream? Here's a trio of stocks that can generate a yield of…

Read more »

Shopping card with boxes labelled REITs, ETFs, Bonds, Stocks
Dividend Stocks

Invest $10,000 in This Dividend Stock for $1,500.50 in Passive Income

If you have $10,000 to invest, then you likely want a core asset you can set and forget. Which is…

Read more »

Dividend Stocks

Here’s the Average TFSA Balance in 2024

The average TFSA balance has steadily risen over the last six years and surpassed $41,510 in 2023. Will the TFSA…

Read more »

potted green plant grows up in arrow shape
Dividend Stocks

TFSA Set and Forget: 2 Dividend-Growth Superstars for the Long Run

I'd look to buy and forget CN Rail (TSX:CNR) and another Canadian dividend-growth sensation for decades at a time.

Read more »