Passive-income investors, particularly newer investors, often struggle finding the best investments that can provide a growing source of income which can last decades.
Fortunately, there’s no shortage of great investment options on the market that can meet, if not exceed, any long-term income goal.
Even better, to the joy of passive-income investors everywhere, some of those great investments are on sale right now.
Here’s a look at two of the best long-term options for passive-income investors to consider buying this June.
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Option #1 – The big bank with a huge upside
I would be remiss if I didn’t mention at least one of Canada’s big banks as a stellar option for income investors.
The big banks can offer stable income backed by a reliable domestic unit and a growth-focused international segment. Throw in a growing dividend and you have some of the best long-term buy-and-forget options on the market.
And that big bank to consider buying right now is Bank of Montreal (TSX:BMO). BMO is the oldest of Canada’s big banks and has been paying out dividends for nearly two centuries without fail.
Today that dividend provides a juicy yield of 5.4%, making it a worthwhile addition for passive-income investors. And let’s not forget that BMO has provided annual upticks to that dividend without fail over the years.
Turning to growth, BMO’s focus is squarely on the U.S. market. Following its well-covered acquisition of Bank of the West, BMO operates across 32 state markets. That also means the bank is one of the largest in the U.S. market, with billions in deposits and millions of customers.
As of the time of writing, BMO trades down year to date by a whopping 11%. This makes it an appealing option to buy to hold for the longer term while it’s still trading at a discount .
Note that passive-income investors who aren’t ready to draw on that juicy income yet can reinvest it until needed. This will allow your BMO position to grow on autopilot for what could be decades of growth.
Option 2# – The telecom that trades at a huge discount
Canada’s telecoms represent another option for passive-income investors to establish an income stream. And as of the time of writing, BCE (TSX:BCE) has a huge upside for long-term investors.
BCE is one of the largest telecoms (or the largest, depending on how you define size) in Canada. The company boasts a massive infrastructure network that blankets the country. BCE provides core subscription services across that network including internet, wireless, wireline and TV.
It’s worth noting that in recent years the importance of both the internet and wireless segments has provided ample growth for BCE. By way of example, in the most recent quarter, both segments reported their best activation numbers in years.
Despite that strong growth, rising interest rates and an ongoing strategic transition at the telecom have weighed heavily on the stock price. The stock is down 14% year to date and a whopping 25% over the trailing 12-month period.
Meanwhile, that dip has sent BCE’s yield in the opposite direction, to an insane 9%, making it one of the highest-paying dividends on the market.
Setting aside BCE’s shorter-term issues, the stock remains a long-term option worthy of consideration. And until interest rates begin to drop and the stock price recovers, prospective passive-income investors can enjoy that juicy yield.
Final thoughts for passive-income investors
No stock, even the most defensive is without some risk. Both BMO and BCE are great defensive options but do carry significant risks. That’s part of the reason why both stocks should be seen as long-term options to buy now and forget about for a decade.
In my opinion, one or both stocks should be core holdings in any larger, well-diversified portfolio.
