Stock market investing is a great way to make your money earn more for you. Some stocks offer excellent returns through capital gains. Others offer returns through shareholder dividends that keep growing your account balance regardless of share price changes. There are also plenty of stocks you can own to enjoy both for several decades.
Investing in high-quality stocks can set you up to achieve financial freedom. It begins by creating solid foundations for your self-directed portfolio. Here are two top-notch TSX stocks you should consider adding to your investment portfolio to enjoy growth in the long run.
Fortis
Fortis (TSX:FTS) is an excellent long-term holding for many Canadian investors. The $27.47 billion market capitalization business owns and operates several utility businesses across Canada, the U.S., the Caribbean, and Central America. It is among the largest names in the utilities industry in North America.
Utility businesses are inherently defensive. Regardless of the economic environment, consumers can never cut utilities to save costs. It allows utility businesses to generate stable and recurring revenues.
Fortis generates almost its entire revenue through assets with long-term contracts in highly rate-regulated markets. It means the company generates predictable cash flows that it can invest comfortably in its capital programs.
Fortis stock does not offer plenty of growth in capital gains. However, it offers steadily growing shareholder dividends. A Canadian Dividend Aristocrat, Fortis stock has increased its payouts for over 50 consecutive years. As of this writing, it trades for $55.48 per share, offering payouts at a juicy 4.25% dividend yield.
Bank of Montreal
Bank of Montreal (TSX:BMO) is one of the Big Six Canadian banks. Each of the Big Six has proven excellent long-term holdings. These banks have a reputation of generating stable revenues, investing in growth, and offering generous dividends to investors. BMO might not be the largest among the Big Six, but it is a solid investment to hold for the long run.
Unlike many of its closest peers, BMO generates most of its revenue through its domestic banking operations. In its recent quarter, BMO generated $921 million through its Canadian segment alone, representing over two-thirds of its total revenue. The bank is also expanding its operations abroad, particularly in the United States. The Bank of the West acquisition last year has grown its presence across the border.
As a dividend stock, BMO has paid its investors their shareholder dividends for almost two centuries. As of this writing, it trades for $127.56 per share, offering payouts at a juicy 4.74% dividend yield.
Foolish takeaway
Investing in top dividend stocks can help you earn steady passive income for several decades. Besides boosting your cash flows, these high-quality stocks add more stability to your portfolio. The growing earnings base and resilient business models they boast can also deliver significant long-term capital gains.
To this end, Fortis stock and Bank of Montreal stock can be excellent holdings for your self-directed investment portfolio.
