Investors make quick bucks in the stock market when they buy low and sell high. The long-standing investment strategy will always be relevant, although success depends on perfect timing. However, purchase dividend stocks if your primary objective is to generate instant income.
Dividend investing is a way to put your money to work and receive recurring income streams, usually quarterly. This strategy is good for people building wealth or saving for retirement. Your capital compounds when you reinvest the dividends instead of pocketing them. Also, any stock price appreciation is a bonus.
The best dividend stocks you can buy today are Bank of Montreal (TSX:BMO) and BCE (TSX:BCE). Because of their lengthy dividend track records, there should be zero headaches for you and a lifetime of dividend income.
Giving back to shareholders
BMO needs minimal evaluation, as the safety and reliability of dividend payouts are incontestable. Canada’s third-largest financial institution is the dividend pioneer or the first company to give back to shareholders. The record has been uninterrupted since 1829 and is only six years short of two centuries.
Rising interest rates amid persistent inflation are headwinds for companies, including banks. Its chief executive officer (CEO) Darryl White said BMO isn’t immune to market forces but remains strong due to a solid foundation and highly diversified business mix. Like its industry peers, BMO had to sacrifice profit and bolster its provision for credit losses ($1.24 billion in the first half of fiscal 2023).
The $85.75 billion Canadian bank is now among the top 10 diversified banks in the U.S. following the acquisition of Bank of the West. BMO will now operate on a larger scale, along with expanded growth opportunities in North America. White emphasized BMO’s presence in three of the five largest markets in the U.S. and digitally in 50 states.
Tayfun Tuzun, BMO’s chief financial officer, added, “Our current capital position, which now exceeds our pre-COVID level after closing the largest bank acquisition in our history, complements the strength of our balance sheet and gives us a distinct competitive advantage.”
If you invest today, BMO trades at $120.27 per share (+0.28% year to date) and pays an attractive 4.91% dividend. You can transform a $30,067.50 investment (250 shares) into a $369.08 quarterly income.
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Dividend grower
BCE is at par with BMO regarding dividend payment history. Besides the 142-year dividend track record, the $53.56 billion communications company has raised its dividend for 14 consecutive years. At $58.72 per share (+1.92% year to date), the yield is a juicy 6.6%. Institutional investors own around 38.75% of BCE’s stock.
Bell Wireless, Bell Wireline, and Bell Media contribute to revenues. Mirko Bibic, BCE and Bell Canada’s president and CEO, said the broadband network build-out plan will continue, despite inflationary cost pressures and regulatory uncertainty. In the first quarter of 2023, capital expenditures reached nearly $1.1 billion.
BCE expects its fibre footprint to remain on pace to expand by 650,000 locations. Notably, 5G services should cover 85% of the population by year-end 2023.
Quality holdings
BMO and BCE are quality dividend stocks that can provide instant income today and pension-like income tomorrow. However, the big bank stock would always be my top choice, regardless of the economic environment.
