2 Top Dividend-Growth Stocks for Long-Term Investors

Here’s why BCE Inc. (TSX:BCE)(NYSE:BCE) and Bank of Montreal (TSX:BMO)(NYSE:BMO) are smart picks in the current environment.

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The weakening Canadian economy has analysts and investors wringing their hands. Some are suffering from bouts of anxiety, while others are excited about the opportunity to pick up some of the country’s top dividend-growth stocks at discount prices.

Here are the reasons why I think investors with a bit of cash on the sidelines should consider adding BCE Inc. (TSX:BCE)(NYSE:BCE) and Bank of Montreal (TSX:BMO)(NYSE:BMO) to their portfolios.

BCE Inc.

When markets start to look shaky, investors tend to move into the more conservative names that offer stable dividend payouts and operate in sectors that tend to be resilient in weak economic conditions.

BCE is one of those stocks, and there is still a window of opportunity to buy shares before they get too expensive.

Through a series of strategic acquisitions, BCE has amassed an impressive portfolio of assets all along the communications value chain. This includes a television network, specialty TV channels, radio stations, sports teams, and retail outlets. International peers look at the strong competitive position with envy and awe.

BCE has also invested billions in its world-class wireline and wireless networks. This means customers across the country can get high-speed access to content using their mobile phones, tablets, computers, or TVs. As the hunger for data grows, BCE has the financial capacity to build the additional infrastructure needed to meet the rising demand.

Earnings continue to grow at a steady and reliable pace, and investors continue to reap one of the country’s largest and most secure dividends. The company currently pays a distribution of $2.60 per share that yields a solid 4.8%.

A Canadian recession will certainly hurt some sectors, but BCE is likely to see little damage. People are not going to give up their mobile phones or their Internet, and the TV subscription will outlast pretty much every other discretionary expense.

Bank of Montreal

When dividend investors look for a company with a long history of giving profits to shareholders, they find Bank of Montreal at the top of the list.

The company has paid a distribution every year since 1829. That’s a pretty good track record, and there is no indication that investors should expect to see the trend broken any time soon.

With 600 branches and two million customers located in the U.S. Midwest, Bank of Montreal has a solid U.S.-based income stream that will help the company ride out the current weakness in the Canadian economy. As the loonie plunges against the greenback, BMO is actually enjoying a nice foreign exchange gain on its U.S. earnings.

The bank has its revenue spread out quite well across four key segments. The U.S. operations accounted for 17% of net income in Q2 2015. Canadian personal and commercial banking represented 38%, capital markets contributed 24%, and wealth management brought in the remaining 21%.

Bank of Montreal pays a dividend of $3.28 per share that yields 4.4%. The shares currently trade at an attractive 10.6 times forward earnings and 1.5 times book value.

This is one stock that dividend investors can comfortably buy and simply sit on for decades.

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.

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