Investing in dividend stocks is the way to make idle money work for you. But the more cunning investors invest in high-yield dividend stocks that you can hold for at least a century.
Among the stocks that can provide you decent total returns for the next 100 years are Bank of Montreal (TSX:BMO)(NYSE:BMO), Canadian Utilities (TSX:CU), and Enbridge (TSX:ENB)(NYSE:ENB). The average yield of the three stocks is nearly 5%, and you’ll have the luxury of receiving passive income for life.
Longest dividend payer
The Big Five banks in Canada have been paying dividends for over 10 decades, including Bank of Montreal. But BMO is a favourite of long-term investors because the bank started it all back in 1829. This $61.5 billion financial institution was the first dividend payer on the TSX.
Many Canadians bought BMO shares for their Registered Retirement Savings Plan with the introduction of the investment vehicle in 1957. Then in 2009, early Tax-Free Savings Account investors purchased this preeminent bank stock.
About 20 years ago, a $10,000 investment in BMO delivered a total return of 722.92%. If you go by this historical data, your overall return could be higher in the 20 years as the bank stock pays 4.2% today.
BMO pays a dividend like clockwork, whether in cyclical markets or during a recession, and this trend will continue every quarter for eternity.
Top utility stock
Canadian Utilities is a stable, diversified utility company capable of sustaining high dividend payouts regardless of economic conditions. This $10.64 billion company has been rewarding investors with dividends since 1950. The stock holds the record of increasing dividends for 47 straight years.
Maintaining the stellar record for decades to come isn’t a problem. Canadian Utilities will carry on and grow its business. This provider of natural gas and electricity generates stable regulated revenue from the markets in North America and Australia.
With its 4.3% dividend and a 10-year compound annual dividend-growth rate of 9%, your investment will double in fewer than 17 years. If the stock’s dividend-growth streak continues, you’ll have the opportunity to further grow your nest egg down the road. I’m sure all long-time investors of Canadian Utilities are happy.
Energy stock for keeps
Despite the cyclical and volatile nature of the energy sector, Enbridge stands out as a high-yield dividend stock for keeps. Aside from the generous 6.5% dividend, the stock offers long-term capital gains.
This $95 billion pipeline stalwart has been paying dividends since 1953. Canadians who have invested in Enbridge since then have not regretted the decision. The stock consistently delivered a total return of well over 100%.
In terms of dividend growth, Enbridge has raised its dividends at a compound annual growth rate of 12.1% over the past two decades. It is expecting a 10% annual dividend growth of 10% through 2020. The target is a dividend payout of less than 65% of its distributable cash flow.
The $7 billion worth of growth projects in 2019 plus $16 billion more in the inventory of projects at various stages of execution assure Enbridge’s earnings growth and support for the pipeline stock’s dividend growth in the years ahead.
Diversified investment portfolio
Investing comes with risk. Fortunately, you can strive to own BMO, Canadian Utilities, and Enbridge. You have a diversified investment portfolio that can endure the recurrent storms in the market.
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 Christopher Liew has no position in any of the stocks mentioned. The Motley Fool owns shares of Enbridge. Enbridge is a recommendation of Stock Advisor Canada.