If you want to spend your twilight years in comfort and not have constantly to worry about finances, it’s best to start investing as early as possible. For the long term, you need to be looking at dependable dividend stocks that offer an attractive yield and hold on to its value.
A tradition nearly two centuries old
Consider how much the world has gone through in the past two centuries. During this time, the world went through World War 1, World War 2 and the Cold War, has experienced countless recessions– including five major ones — and has gone through one of the worst pandemics in history – the Spanish flu.
With all these disastrous events happening in this time frame, one might find it surprising to learn that Bank of Montreal has managed to keep a 191-year of consecutive payout to its investors — higher than any other Canadian stock can boast about.
Starting in 1829, when stock markets were still recovering from a severe international financial crisis, the bank management decided to proceed with the payouts to its investors, giving rise to a tradition that’s still going strong today and showcasing impressive dependability.
Continuing the trend
At present, the Bank of Montreal shows no indication of straying off-course and remains faithful to its shareholders in its payouts. The pressure remains for the bank to continue carrying its streak forward, as management knows just how much investors value consistency.
However, the bank will also need to maintain a balance between being generous in rewarding investors and possessing the financial leverage to pull through economic downturns.
With a healthy balance sheet, growing net income, and an estimated payout ratio under 40%, the bank is more than equipped to likely withstand a recession.
The bank has also been investing aggressively in the growth of its global presence, and, as of 2020, the bank operates in 14 countries. With plenty of room to grow, especially in the emerging markets, many anticipate most of the bank’s future growth is likely to come from its international operations.
As the country ages, the demand for dividend stocks is on the rise. BMO is a stock choice par excellence for any long-term investor. At a pleasing 4.43% annual dividend yield, the bank remains a safe and reliable way to rapidly grow your retirement income.
Also, despite setbacks during times of recessions, the bank’s share has been a steady upward rise. If you’d invested $10,000 two decades ago, that amount right now would be about $37,568.
This is discounting the annual dividend payout, which, if they went to be invested back in, would result in a much higher figure.
With a forward P/E of 9.30, the bank’s stock is potentially fair valued.
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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 Jason Hoang has no position in any of the stocks mentioned.