Why do people buy into or invest in stocks? The answer is simple: to make money. But can you get richer in the stock market? Indeed, although it takes time. Day traders make a killing by buying low and selling high, but if the objective is to build wealth, the durable path is through dividend investing.
Many individual Canadian stocks have lengthy dividend track records or are reliable passive income providers. Among the best stocks you can buy now and hold forever are the Bank of Montreal (TSX: BMO), Suncor Energy (TSX: SU), and Canadian Utilities (TSX: CU).
The first two belong to the TSX’s top two heavyweight sectors (financial and energy), while the third wears a crown. You can form a formidable portfolio and expect to earn pension-like income in retirement. Hold them in tax-advantaged or tax-sheltered investment accounts for tax-free money growth.
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Oldest dividend payer
BMO, the oldest Canadian bank, is the TSX’s dividend pioneer. It started paying dividends in 1829, and no investor could outlive its 195-year dividend track record. Today, this $58.9 billion company is the country’s third-largest lender by market cap. At $112.02 per share, you can partake in the 5.7% dividend.
Suppose you invest $33,606 (300 shares). Your capital will compound to $103,417.10 in 20 years, including dividend reinvesting. The power of compounding will work its magic if you keep reinvesting the quarterly dividends. Assume further the dividend yield remains constant in the same period. The final balance can remain intact, while you earn $1,463.35 in quarterly passive income.
In June this year, Fitch Ratings affirmed its ‘AA-‘ rating or stable outlook for BMO. The Big Bank boasts a strong Canadian franchise and has sizeable U.S. operations following the purchase and integration of Bank of West. BMO is now North America’s eighth-largest bank.
Oil bellwether
Suncor Energy, Canada’s second-biggest oil producer, is a perennial volume leader. At $50.93 per share, current investors enjoy a 22.7% market-beating, year-to-date gain on top of the 4.3% dividend yield. The $65.4 billion integrated energy company has recovered remarkably from the oil slump in 2020 and has been profitable every year from 2021 to 2023.
On August 6, 2024, Suncor Energy reported record quarterly refined product sales of 594,700 barrels per day and 92% utilization in Q2 2024. Also, adjusted earnings rose 23.3% year-over-year to $1.6 billion.
First dividend king
If BMO is TSX’s dividend pioneer, Canadian Utilities is its first dividend king. A company earns the crown if it has raised dividends for 50 consecutive years. The utility stock’s dividend growth streak is now 52 years. At $32.53 per share, the dividend offer is 5.5%.
This $9 billion diversified global energy infrastructure company benefits from a stable business model, especially regulated utilities. Expansion and investments in new projects to grow or increase the base rate are ongoing.
Canadian Utilities expects to invest $4.6 to $5 billion in regulated utilities from 2024 to 2026. The investment should result in significant earnings and cash flows while creating long-term shareholder value.
Cream of the crop
Bank of Montreal, Suncor Energy, and Canadian Utilities are among TSX’s best stocks. They offer peace of mind and limitless wealth-building potential.
