Dividend Kings are super-rare stocks that have increased dividends for 50 consecutive years. The TSX only has two, Canadian Utilities and Fortis, plus a host of Dividend Aristocrats with dividend-growth streaks of at least five years. However, none of them can qualify for the Hall of Fame if the basis is dividend longevity and fantastic yields.
Dividend pioneer
Bank of Montreal (TSX:BMO) and BCE (TSX:BCE) are worth owning forever because of their more than 100-year dividend track records. The big bank started paying dividends in 1829, while the telco giant initiated its first dividend in 1881. Both are runaway choices for North American income investors.
After acquiring the Bank of the West in the U.S., BMO has overtaken Bank of Nova Scotia as the third-largest Canadian bank by market capitalization. The $66 billion bank completed the conversion, integration, and migration of the accounts (nearly two million) into its operating systems in December 2023.
Research and advisory firm Celent named BMO its 2024 Model Bank for Integration Excellence for the Canadian bank’s technical achievement in the accelerated conversion of an acquired bank and for best practices in migration and onboarding of the new customer base.
“With the integration of Bank of the West complete, we have achieved 100% of the US$800 million run-rate cost synergies to start the second quarter, and we’re delivering incremental operational efficiencies across the enterprise, resulting in a sequential decline in our expense base,” said Darryl White, chief executive officer (CEO) of BMO.
However, White said that the challenging environment has constrained revenue growth in BMO’s market-sensitive businesses in the near term. Still, in the first quarter (Q1) fiscal 2024, reported net income climbed 871.4% to $1.3 billion versus Q1 fiscal 2023. Notably, the provision for credit losses (PLC) increased 40.6% year over year to $627 million.
White assures that management focuses on positioning the BMO effectively for long-term success. The primary objectives are reducing expenses, optimizing the balance sheet, and growing customer relationships. He also sees California as a strategically important market whose economy is twice as large as Canada’s.
Lastly, White said rates could begin to ease soon, and the market could see a new normal, an environment with fundamentally different characteristics compared to the last 20 years. If you invest today, BMO trades at $91.01 per share and pays a 4.91% dividend.
Monster dividends
Cash cow is an understatement if I were to describe BCE today. At $44.34 per share, you can partake in the monster 9% dividends. Assuming you purchase 450 shares, the $20,223 investment will generate $455 in quarterly dividend income. Besides the lengthy dividend track record, the $40.45 billion telco giant and 5G stock is a Dividend Aristocrat owing to 14 consecutive years of dividend increases.
Communications services is TSX’s worst-performing sector thus far in 2024, but the weakness doesn’t diminish BCE’s capacity to sustain dividend payments. Its net income is at least $2.2 billion yearly. Also, a retreat in the share price is a buying opportunity.
Generous dividend payers
In my book and those of other income investors, BMO and BCE are Hall of Famers. The pair matches their dividend track records with generous dividend yields.
