There’s never a one-size-fits-all approach when investing in the market. You can be successful with stock market investing using several approaches. The key to success is having a sound long-term strategy for putting your money to work in the market. Even if you have as little as $25,000, you can make a lot of money by making smart investment decisions.
In my opinion, dividend investing is one of the best ways to get returns from stock market investing. When you invest in dividend stocks, you unlock the opportunity to grow your wealth through capital gains and also supplement that growth with dividend income. High-quality dividend stocks with an impeccable reputation for distributing payouts can be a sure-shot way to build lasting wealth.
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Bank of Montreal
Bank of Montreal (TSX:BMO), a $106.6 billion market-cap TSX banking stock, is one of the best banking stocks on the TSX. It is one of the Big Six Canadian banks, offering personal and commercial banking in Canada, alongside operations in capital markets and wealth management. BMO is one of the most diversified financial institutions in the country, and it performs well on the stock market.
In its January-ending quarter, which is Q1 of fiscal 2025, BMO saw its revenue increase by 21% year-over-year, and its adjusted net profit increased by 21% in the same period. BMO is currently buying back shares and increasing its payouts. The long-term outlook is strong. As of this writing, BMO stock trades for $147.60 per share and pays its investors their shareholder dividends at a 4.4% dividend yield.
TC Energy
TC Energy (TSX:TRP) is another major stock, but it belongs to the energy sector. It is not an energy producer itself. Rather, it is an energy stock focused on servicing the rest of the industry. TC Energy is a $70.8 billion market-cap company operating an extensive energy infrastructure portfolio. It has a massive pipeline network that connects the US, Canada, and Mexico, transporting hydrocarbons produced and consumed in North America. It also has significant interests in several power-generation facilities.
TC Energy has been facing some issues lately due to macroeconomic factors, but it hasn’t been doing poorly. The company’s revenue for Q4 2024 came in at around $1.4 billion, and its adjusted earnings per share were $0.52. While being down from the same period last year, the company’s wide profit margins softened the blow. Its long-term focus on expanding clean energy projects offers plenty of growth potential that investors can leverage.
As of this writing, TRP stock trades for $68.07 per share, boasting a juicy 5% dividend yield.
Foolish takeaway
When volatile market conditions keep looming overhead, dividend income can provide returns regardless of losses in share prices. You can use the money to line your account with extra cash or use a dividend reinvestment plan to unlock the power of compounding and accelerate your wealth growth.
If you hold your investments in a Tax-Free Savings Account (TFSA), you can enjoy the wealth growth without incurring taxes on dividends or capital gains. While an even split of $12,500 in each stock would be a great way of earning dividends, you should never put all your eggs in one or two baskets. BMO stock and TRP stock are good examples that you can consider as foundations for a self-directed dividend income portfolio.
