2 Dividend-Growth Stocks I’d Buy With an Extra $5,000 in 2016

Here’s why Bank of Montreal (TSX:BMO)(NYSE:BMO) and BCE Inc. (TSX:BCE)(NYSE:BCE) are solid investment picks for a year-end windfall.

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Once in a while, investors find themselves with a bit of extra cash during the holiday season.

The money could be from a bonus at work or a gift from a family member. Regardless of the source, the prudent thing to do is use the windfall to pay down debt. If the credit card is already under control, it might be worthwhile to add one or two dividend-growth stocks to your TFSA portfolio.

Here are the reasons why I think Bank of Montreal (TSX:BMO)(NYSE:BMO) and BCE Inc. (TSX:BCE)(NYSE:BCE) are solid picks.

Bank of Montreal

Bank of Montreal is often overlooked when investors are choosing a bank stock for their portfolios, but that strategy might not be the best one going forward.

The company has a balanced revenue stream coming from different sectors in the banking industry with strong personal banking, wealth management, and capital markets divisions.

Bank of Montreal also gives investors an opportunity to benefit from the rising U.S. dollar. The company operates more than 500 branches in the U.S. serving about two million customers.

The commercial group is particularly strong in the U.S. and Bank of Montreal’s recent purchase of GE Capital’s Transport Financing business should boost revenues and profits in the U.S. division in the coming years.

Bank of Montreal pays a quarterly dividend of $0.84 per share that yields 4.3%. The company has paid out some of the profits to investors every year since 1829.


BCE is a dominant force in the Canadian media and telecommunications market.

The company has invested heavily in recent years to add retail, television, radio, advertising, and sports assets to the portfolio, giving the company access to revenue all along the media and communications value chain.

In fact, BCE is so well integrated in the Canadian market that most people put a bit of money into the pockets of BCE’s shareholders every month because it is nearly impossible to consume data, watch TV, listen to the radio, or communicate with your friends without BCE being involved somehow in the process.

The company is rolling out fibre-to-the-home in core markets, which will help enhance its competitive advantage for years to come as consumer demand grows for world-class data speeds delivered right into the living room.

Management is also very cost-conscious and has shown in recent months that it is willing to make cuts in media assets that aren’t profitable.

BCE pays a quarterly dividend of $0.65 per share that yields 4.8%. Investors should see the distribution continue to rise in step with the growth in free cash flow.

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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