Stock investing is one of the simplest ways to build retirement funds. Many retirees, in particular, turn to dividend-paying stocks to augment pensions or have money to cover living expenses. However, ensuring financial security in the sunset years means choosing investor-friendly companies that will support your strategy all the way.
Canadian dividend stocks like Bank of Montreal (TSX:BMO) or Canadian Utilities (TSX:CU) fit the bill and are a retiree’s best friend. The former is TSX’s dividend pioneer, while the latter is Canada’s first ever Dividend King. You can buy one or both today if you need dividends to roll in for years without interruption.
Nearing two centuries of dividend payments
BMO welcomed clients on November 3, 1817, before establishing its first agency in the U.S. in 1818. Canada’s oldest bank started paying dividends in 1829, and the practice continues. The dividend track record of 194 years indicates the payouts are enduring.
The $85.11 billion financial institution (fourth largest) is one of the country’s vaunted Big Five banks. BMO trades at $121.02 per share (-0.28% year to date) and pays a hefty 5.44% dividend. The board approved an 8% dividend hike from the same quarter in fiscal 2022.
Some people worry about the financial system following the recent collapse of Silicon Valley Bank in America. Its chief executive officer Darryl White said BMO is well situated in any environment, notwithstanding the current uncertainties. Management looks forward to the natural next step in BMO’s growth strategy in North America.
The Canadian bank will have an expanded presence in the U.S. (Western and Midwestern parts) after completing the acquisition of Bank of the West. In fiscal 2022 (12 months ended October 31, 2022), net income rose 74.6% year over year to $13.53 billion. However, net income in the first quarter (Q1) of fiscal 2023 declined 91.6% to $247 million versus Q1 fiscal 2022.
The drop was due to the closing of the Bank of the West acquisition and higher loan loss provision. Nonetheless, White was pleased with the most recent quarterly results. He said, “Our results continue to reflect our diversified business mix and our superior risk management approach and credit quality.” BMO is in good financial shape with no threat to dividends whatsoever.
Defensive, low-risk asset
A Dividend King like Canadian Utilities is a no-brainer buy for current and future retirees. The top-tier utility stock’s 51 consecutive years of dividend growth is the longest on record of any TSX company. Moreover, you have a defensive asset paying good dividends. At $38.96 per share (+7.61% year to date), the yield is 4.66%.
The growing high-quality earnings base of this $10.5 billion utility and energy infrastructure company gives it financial strength and stability. Management commits to growing the business further in the years ahead.
From 2023 to 2025, CU will invest $3.3 billion in regulated utility and $0.8 billion in commercially secured energy infrastructure capital growth projects. Expect the capital plan to contribute significant earnings and cash flows while creating long-term shareholder value.
Best for retirees
No Canadian dividend stocks can be friendlier to retirees than BMO and Canadian Utilities. The longest dividend track record and longest dividend-growth streak are enough to make either stock the core holding in your retirement portfolio.