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Dividend Investors: 2 Steady Income Stocks for Your TFSA

Canadians are searching for quality dividend stocks to add to their TFSA portfolios.

Let’s take a look at Telus Corporation (TSX:T)(NYSE:TU) and Bank of Montreal (TSX:BMO)(NYSE:BMO) to see why they might be interesting picks.

Telus

Telus has avoided the temptation to spend billions of dollars on media assets.

Some pundits say this decision will come back to haunt the company, while others believe it will prove to be a smart move. Time will tell, but for the moment, Telus appears to be rolling along quite nicely.

The business continues to add mobile, TV, and internet subscribers at a strong pace, and while new mobile competition is ramping up from Shaw Communications, Telus should be able to hold its own.

Why?

Telus has made a firm commitment to ensure it provides industry-leading service and is investing heavily in network expansion and upgrades.

The fruits of those efforts are turning up in the numbers.

The company regularly reports the lowest monthly post-paid mobile churn rate in the sector and has generated higher blended average revenue per user (ARPU) for 24 consecutive quarters on a year-over-year basis.

Avoiding the media frenzy has freed up capital to invest in other opportunities, and one development to watch is the company’s Telus Health group, which provides digital solutions to doctors, hospitals, and insurance companies. The division is already a leader in this growing market, and investors could see the segment become a significant contributor to earnings in the coming years.

Telus has raised its dividend 12 times in the past six years. The current quarterly dividend of $0.48 per share provides a yield of 4.4%.

Bank of Montreal

Investors often skip Bank of Montreal when looking for a financial stock to add to their portfolios, but that might be a mistake.

Bank of Montreal’s balanced revenue stream makes it an attractive pick in the current environment. The company gets significant earnings from its Canadian personal and commercial banking operations, but also has strong wealth management and capital markets divisions.

On top of this, Bank of Montreal has a large presence in the United States with roughly 500 branches primarily located in the Midwest.

The addition of GE Capital’s transport finance business in late 2015 has bolstered the commercial banking operations, and the strong U.S. dollar is providing a nice boost to income when U.S. earnings are converted to the Canadian currency.

Bank of Montreal has paid a dividend every year since 1829. The current quarterly distribution offers an annualized yield of 3.6%.

Is one more attractive?

Both stocks are solid buy-and-hold picks for a TFSA income portfolio.

Bank of Montreal has enjoyed a strong rally in recent months, so the stock might be due for a healthy pullback.

Telus now offers a better yield, and I think dividend growth at the two companies will be similar over the medium term. As a result, I would probably go with the communications firm as the first pick today.

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

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