Retirees are searching for dividend income to supplement their pension payments, but they want to own stocks that hold up well when the market gets ugly.
The company has grown significantly over the years through a combination of strategic acquisitions and organic development.
Last year Fortis generated record net income of $2.11 per share that was driven by the completion of an expansion at its Waneta hydroelectric facility in British Columbia as well as the integration of its US$4.5 billion purchase of Arizona-based UNS Energy.
Fortis just announced a US$11.3 billion acquisition of ITC Holdings Corp., the largest independent pure-play transmission company in the United States, so the beast continues to grow.
The stock is attractive because the majority of the company’s revenue comes from regulated assets. This means cash flow should be predictable and reliable, which is great news for dividend investors.
Management plans to raise the dividend by 6% per year through 2020, and investors should feel confident in the guidance. Fortis has increased the payout every year for more than four decades, and the stock currently offers a yield of 3.7%.
Investors often overlook BMO in favour of its larger peers, but Canada’s oldest bank deserves more respect.
The company has a balanced revenue stream that is very attractive in the current market. The largest chunk of BMO’s earnings comes from the Canadian retail operations, but the bank also has strong wealth management and capital markets divisions, as well as a growing business in the United States.
BMO’s U.S. division is a big reason why the stock is so appealing. The company owns more than 500 branches with a focus on the U.S. Midwest and recently purchased GE Capital’s Transport Finance business.
The addition of the new assets should boost the company’s revenue on the commercial side of the business, which is already delivering impressive results. The U.S. group generated 18% of fiscal Q1 2016 profits and provides a nice hedge against weakness in the Canadian economy.
Bank of Montreal has paid a dividend every year since 1829. That’s an impressive track record, and investors should see the strong trend continue.
The stock currently comes with a quarterly dividend of $0.84 per share that yields 4.1%.