Often times, investors seeking passive income are looking to hunt down safe dividends. After all, if you’re looking to leverage dividends as an income stream, reliability is key.
Now, many stocks have been forced to cut their dividends this year. However, there are still plenty of stocks trading with reliable dividends.
These are typically stocks with diverse streams of revenue and offer non-cyclical and essential services. So, that means things like utilities, banking, grocery, and so forth.
This is because these are stocks that have continued to post solid numbers despite economic challenges. As such, they’re able to safely support the dividend they offer.
Today, we’ll look at two TSX stocks offering investors safe dividends.
Most Canadian investors have at least heard of Fortis, and can see that it’s a relatively stable stock. After all, it sports a beta of 0.05 which suggests it’s usually highly resistant to market movements.
One major reason for this is due to how Fortis structures its operations. Namely, the vast majority of the utility services it provides are conducted through regulated contracts.
What that really means is that Fortis’ revenue streams are secure and predictable. As a result, Fortis is able to offer solid and safe dividends to its investors.
The proof is really in the pudding here, and Fortis has a great track record for paying and growing its dividend. It’s never going to be a flashy stock to own, but it can do the job depending what you’re after.
While a yield of 3.88% isn’t particularly mind blowing, it’s also nothing to sneeze at. Plus, its rock-solid stability makes it even more attractive to income investors.
Fortis is worth a look for those seeking safe dividends going forward.
BMO has long been a hallmark of stability, especially when it comes to safe dividends. In fact, it has the longest active streak in Canada when it comes to paying dividends, having paid one every year since 1829.
That’s quite a remarkable feat given the enormous challenges any business would have faced from then to now. While past performance isn’t a great indicator of future performance, this type of track record simply speaks to BMO’s rock-solid stability.
As of this writing, this banking giant is trading at $97.47 and yielding 4.35%. A yield well north of 4% attached to a name like BMO should be attractive to income investors.
While there could be bumps in the road ahead, long-term sentiments for BMO should be largely positive. If you’re looking for safe dividends for the long haul, BMO is a great name to check out.
Scouting for safe dividends
Both these stocks offer investors very stable dividends with solid prospects for the future. In the long run, these stocks can offer passive income investors reliable income.
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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 Jared Seguin has no position in any of the stocks mentioned. The Motley Fool recommends FORTIS INC.