2 Stocks That Could Create Lasting Generational Wealth

TSX’s dividend pioneer and first dividend king are the best options for Canadians to create lasting generational wealth.

| More on:
Canada Day fireworks over two Adirondack chairs on the wooden dock in Ontario, Canada

Source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

A family can have greater financial security for years by passing down financial wealth and assets to immediate family members. Financial wealth refers to money, savings, and investments, while assets refer to houses, real estate properties, and jewelry.    

However, those without hard assets to give or leave with heirs can build generational wealth through dividend investing. The stock market is not risk-free, although a long investment timeframe helps reduce risk and counter recurring volatility.

Canadians could create lasting generational wealth by investing in the Bank of Montreal (TSX:BMO) and Canadian Utilities (TSX:CU). The former is TSX’s dividend pioneer, while the latter is its first dividend king. The power of compound interest comes into play if you reinvest dividends (four times a year) from both stocks. Your capital grows faster and eventually becomes a fortune over time.

Dividend pioneer

BMO is Canada’s oldest bank and dividend pioneer. The dividend track record is 195 years and counting. The prevailing dividend yield of 5% is not the highest in the market, but it is sure to be safe and sustainable given the Big Bank’s solid payment history. You get peace of mind for the price of $126.33 per share.

Created with Highcharts 11.4.3Bank Of Montreal PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.ca

The $91.3 billion financial institution has a stronger position and presence in the U.S. following the acquisition of the Bank of the West in February 2023. BMO finished the migration and integration of customers in March of this year. The Group’s CEO, Darryl White, said the acquisition added meaningful scale, expansion in attractive markets, and capabilities to drive greater growth, returns, and efficiencies.

Meanwhile, the appointment of Kristin Milchanowski as its new Chief Artificial Intelligence and Data Officer in mid-October signals the bank’s AI, data analytics, and robotics strategies to enhance business value. The Evident AI Innovation in Banking Index ranks BMO ninth in the world in AI innovation.

BMO is doing well after three quarters in fiscal 2024. In the nine months ending July 31, 2024, revenue and net income increased 12.2% and 45.7% year-over-year respectively to $23.8 billion and $5 billion. According to White, BMO is well-positioned to deliver sustainable returns to shareholders. Besides a strong balance sheet and robust capital and liquidity, strategic goals are firmly in place.

Dividend king

Utility companies are stable and safe choices for income-focused investors. The TSX has plenty, but Canadian Utilities stands out from the rest. This utility stock is Canada’s first dividend king, and the magic number is “52,” the longest record of annual dividend increases by a publicly traded company in the country.

Created with Highcharts 11.4.3Canadian Utilities PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.ca

At $35.68 per share, current investors enjoy a 16.8% year-to-date gain on top of the 5.2% dividend yield. The $9.6 billion company boasts a highly contracted and regulated earnings base, the foundation for sustained dividend growth. Management said the company will invest $4.6 to $5.6 million from 2024 to 2026 in regulated utilities to further grow cash flows and earnings.

Incredible feats

BMO and Canadian Utilities are compelling investments for their incredible dividend track record and dividend growth streak, respectively. The dividend pioneer or dividend king can help you build lasting generational wealth.

Should you invest $1,000 in Bank of Montreal right now?

Before you buy stock in Bank of Montreal, consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and Bank of Montreal wasn’t one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $20,697.16!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 29 percentage points since 2013*.

See the Top Stocks * Returns as of 3/20/25

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Christopher Liew has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Confidently Navigate Market Volatility: Claim Your Free Report!

Feeling uneasy about the ups and downs of the stock market lately? You’re not alone. At The Motley Fool Canada, we get it — and we’re here to help. We’ve crafted an essential guide designed to help you through these uncertain times: "5-Step Checklist: How to Prepare Your Portfolio for Volatility."

Don't miss out on this opportunity for peace of mind. Just click below to learn how to receive your complimentary report today!

Get Our Free Report Today

More on Dividend Stocks

Piggy bank with word TFSA for tax-free savings accounts.
Dividend Stocks

TFSA: Invest $15,000 in This TSX Stock and Create $884 in Annual Passive Income

This TSX stock certainly has quite the long-term outlook -- one that could create passive income now and decades to…

Read more »

Dividend Stocks

Invest $20,000 in These REITs for Over $1,000 in Annual Passive Income

Are you looking for a boost in your passive income? Then consider these two REITs for your self-directed investment portfolio.

Read more »

Asset Management
Dividend Stocks

How I’d Allocate $10,000 in 2 Canadian Growth Stocks for the Long Run

Both growth stocks offer a compelling mix of income, growth, and value, and I believe they can outperform over the…

Read more »

grow money, wealth build
Dividend Stocks

2 Dividend-Growth Stocks to Buy on the Pullback

These stocks have increased their dividends annually for decades.

Read more »

Electricity transmission towers with orange glowing wires against night sky
Dividend Stocks

BCE Stock Analysis: A Smart Choice for Potential Value and Income

BCE stock has slipped to its June 2009 level amid Trump tariff uncertainty and intensity. Does the sharp dip provide…

Read more »

Person slides down a stair handrail
Dividend Stocks

Should You Buy Cargojet Stock at $70?

Cargojet stock might be down, but don't let that scare you off. It's still a long-term opportunity.

Read more »

Middle aged man drinks coffee
Dividend Stocks

3 Monthly Dividend Stocks to Buy and Hold Forever

Add these three TSX dividend stocks to your self-directed portfolio for reliable monthly passive income.

Read more »

Hourglass projecting a dollar sign as shadow
Dividend Stocks

How I’d Build an Income Portfolio With 3 TSX Stocks Paying Monthly Dividends

Focusing on these three monthly paying TSX dividend stocks can help you reinvest more frequently, enhancing overall returns.

Read more »