2 Top Dividend Picks for Retirement Income

Some pensioners rely on dividend-growth stocks to help supplement their retirement income.

Here are the reasons why I think Bank of Montreal (TSX:BMO)(NYSE:BMO) and BCE Inc. (TSX:BCE)(NYSE:BCE) deserve to be on your radar.

Bank of Montreal

Canada’s oldest bank is often bypassed in favour of its larger peers, but Bank of Montreal is a solid choice in the current environment.

The bank has a balanced revenue stream with strong retail, wealth management, and capital markets divisions. All of the segments are performing well, but the standout is the company’s U.S.-based business, which includes more than 500 branches.

The U.S. group contributed 18% of fiscal Q1 2016 profits and offers a nice hedge against weakness in the Canadian economy. The bank’s recent acquisition of GE Capital’s transport finance business should drive growth in the commercial banking segment.

Bank of Montreal is feeling the effects of the oil rout, but loans to oil and gas companies only represent about 2% of the total loan book. On the mortgage front, the bank’s portfolio is in good shape with uninsured mortgages representing just 41% of the loans. The loan-to-value ratio on that segment is 57%. This means the Canadian housing market would have to fall significantly before Bank of Montreal takes a material hit.

The bank has paid a dividend every year since 1829, and the current quarterly distribution of $0.84 per share yields a solid 4.25%.


BCE continues to fortify its dominant position in the Canadian market, and investors are reaping the rewards.

The company has made a push into the media space and currently owns sports teams, a television network, radio stations, specialty channels, Internet portals, and retail stores. When you combine these assets with the state-of-the-art mobile and wireline networks, you get a business that interacts with most Canadians on a weekly, if not daily, basis.

Think about it. Any Canadian who catches a Leafs game, sends a text, checks e-mail, downloads a movie, listens to the weather report, or watches the news probably uses one of BCE’s products or services somewhere along the line. As demand expands for 24/7 access to content on multiple platforms, BCE is well positioned to deliver the goods and profit handsomely along the way.

That’s a great business and one that income investors should own.

BCE pays a quarterly distribution of $0.6825 per share, which yields a solid 4.6%.

Stocks certainly come with more risk than GICs, but BCE has proven to be a solid pick and is widely considered one of those companies investors can buy and simply forget about for decades.

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

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