2 Canadian Dividend Giants That Belong in Every Portfolio

Want dependable, growing income? Hydro One and BMO offer steady, rising dividends backed by essential services and strong balance sheets.

Amy Legate-Wolfe

Amy became interested in investing in 2018 after having her first daughter. After receiving a masters degree in journalism from Western University, she became frustrated that the finance industry remained a confusing place for Canadians like her: new parents, millennials, and other young people who needed to understand their finances. Now, Amy focuses on tech companies and renewable energy for growth opportunities, coupling that with long-term investing strategies and equities. She also provides investors with a daily newsletter, Canada Stock Digest, for daily market updates. Before joining Motley Fool Canada, she wrote for major news organizations including HuffPost, CTVNews.ca, and CBC. When she’s not researching investing strategies, Amy’s time is pretty much monopolized by her two wild daughters, but in what little spare time she has she loves to do yoga, go on walks with her dog, and travel with her husband. Follow Amy on LinkedIn and Canada Stock Digest. Favorite Investment Quote: “October: This is one of the particularly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” – Mark Twain

Published November 7, 8:00 pm EST

| More on: BMOH

Canadian investors seeking out lasting income often come back to dividend stocks. Yet many might look at juicy yields above 8% and think they’re the ones to beat. While those can be tempting, it’s important to remember that it’s far more lucrative to look for dividend stocks with rising dividends. Those yields are tied to a share price, not a dividend payout. So today, we’re going to look into two dividend stocks with rising payouts, stable sectors, and far more growth to come.

H

Hydro One (TSX:H) is the kind of dividend stock that offers stable, essential, and reliable dividends backed by the most predictable business model on the TSX. The dividend stock is Ontario’s largest electric transmission and distribution utility, responsible for delivering power to nearly 1.5 million people and businesses across the province. Its network is enormous, covering about 98% of Ontario’s geography. What makes this business so powerful for investors is that it’s fully regulated. Whether markets soar or crash, people still turn on their lights, charge their cars, and heat their homes, and Hydro One gets paid for it.

Financially, Hydro One has one of the strongest profiles in Canada’s utility sector. In its most recent quarterly report, the dividend stock posted revenue of $2.1 billion, up modestly year over year, and net income of $327 million, up from $292 million. Cash flow is stable enough to fund both capital expansion and regular dividend increases. Hydro One’s regulated model allows it to recover costs and earn steady returns on every dollar invested in infrastructure upgrades.

That steady income translates directly into shareholder returns. The dividend stock pays a yield of around 2.5%, which may not be the highest on the TSX, but it’s among the most reliable. More importantly, Hydro One has been raising its dividend every year since going public in 2015, typically by 5% annually. Its payout ratio at about 60% of earnings is comfortably sustainable, leaving room for reinvestment and gradual growth. Those dividends can compound quietly, building a growing stream of tax-advantaged income for decades.

BMO

Bank of Montreal (TSX:BMO) belongs in every long-term portfolio as Canada’s oldest bank, founded in 1817. BMO has weathered every major economic cycle while delivering steady dividends and long-term growth. Its core strength comes from its diversified business model, which balances traditional retail banking with wealth management, capital markets, and a growing U.S. presence. The bank serves over 13 million customers across North America and has steadily expanded its reach in the United States through its acquisition of Bank of the West, completed in 2023. That deal instantly boosted its U.S. footprint, particularly in high-growth markets across the Midwest and California, setting BMO up for decades of cross-border expansion.

Financially, BMO is one of the most disciplined institutions on the TSX. It maintains a strong capital position, with a Common Equity Tier 1 (CET1) ratio around 13.5%, well above regulatory minimums. In its most recent quarterly report, BMO delivered net income of $2.3 billion, up a whopping 25% from the previous year. Even in a period of higher loan losses and cautious consumer spending, BMO continues to generate robust earnings thanks to its cost controls and diversified revenue streams.

Where BMO truly shines is in its dividend legacy. It has paid a dividend every year since 1829, the longest unbroken dividend record of any Canadian company. Today, it yields around 3.8% supported by a 55% payout ratio. That income stream is not only stable but also growing, with BMO increasing its dividend regularly, typically twice a year. For investors looking for passive income, those dividends compound beautifully over time, building an ever-growing income stream.

Bottom line

If you want passive income that lasts, look to companies offering essential services and growing dividends. These two dividend stocks might not be the most exciting, but the income you can create certainly is. In fact, here’s how much $7,000 invested in each dividend stock could bring you.