If you’re looking for dividends, the Canadian banks are the best place to start. These financial institutions have been around for decades, over a hundred years in some cases! And in that time, they’ve amassed enough provisions for loan losses to manage even in the darkest of times.
In fact, there hasn’t been a banking crisis in Canada since 1837! Which is why these are some of the best places to go when it comes to dividends. Banks in Canada are likely to continue pushing out dividends pretty much no matter what. But when it comes to stable dividends, these are the two I would go with first on the TSX today.
Royal Bank of Canada
If you want consistent dividends that will continue to be pumped out, then you want to consider the biggest bank in Canada. Royal Bank of Canada (TSX: RY) remains the largest in terms of assets under management as well as market capitalization. And it looks like it’s only going to grow bigger.
RBC stock has an acquisition on the table to acquire HSBC. While there has been some commentary about competition, HSBC is putting itself up for sale. This isn’t some small bank being taken over by a large institution, but the merger of two larger ones. And the banking sector has been drooling over it for years.
So now RBC stock will remain a top notch bank when it comes to wealth and commercial management, bringing in stable cash flow through this and emerging markets. But on top of that, it will have another growth opportunity through HSBC.
So if you’re looking for stable dividends, this company will certainly have enough growth coming in to sustain them. Right now, RBC stock holds a 4.17% dividend yield. Shares are up 3.6% in the last year, offering growth as the market continues to recover.
Bank of Montreal
Another of the Canadian banks to consider for dividends and growth these days is Bank of Montreal (TSX: BMO). BMO stock has been expanding in the United States, acquiring Bank of the West to increase its presence in the western part of the country.
But the company has been expanding for years through its exchange-traded funds (ETF) as well. But really it’s this Bank of the West purchase that puts it ahead. That’s because the United States is no longer allowing large foreign institutions to make large acquisitions in the country.
So BMO stock managed to sneak in there before the change, and is now looking for growth as the market recovers. Meanwhile, the company continues to offer a substantial 4.74% dividend yield, increasing it again and again even as interest rates and inflation remain high.
Yet even as shares recover, up 4.4% in the last year, there is still value to be had. BMO stock trades at just 2.7 times sales and 1.3 times book value. So certainly keep BMO stock on your radar as well if you’re looking for strong dividends going into 2024.
