Canada’s banking sector, notably the Big Five, is a bedrock of stability. All have exceptionally long dividend track records. You don’t invest in these giant lenders to capture capital gains. Instead, you treat them as core holdings to generate stable, passive dividend income.
There are strategic reasons to pick one over the others. Also, if you invest in one or two Canadian bank stocks, you’re likely to hold them for good and never sell ever.
Gold standard
Assuming the Big Five are precious metals, then Royal Bank of Canada (TSX:RY) is gold — not silver or copper. I say that because of its size and scale. This $298 billion financial institution is TSX’s largest company by market capitalization. Some analysts believe the superior business mix and lower lending exposure are its strengths.
Price is not an issue if dividend safety and peace of mind are your criteria. At $214.72 per share (+28.1% year to date), the dividend offer is 2.91%. RBC’s dividend payment record is 155 years and counting. Furthermore, the modest yield is best for long-term dividend growth. Even in the U.S., RBC is among the highly preferred bank stocks.
RBC reported strong growth across each of its business segments in the third quarter (Q3) of fiscal 2025. In the three months ended July 31, 2025, net income rose 21% to $5.4 billion compared to Q3 fiscal 2024. The Insurance division’s net income increased 45% to $247 million from a year ago.
According to its president and CEO, Dave McKay, RBC’s robust capital position (it has a common equity tier-one ratio of 13.2%) supports solid volume growth. He maintains long-term optimism for the bank, but views tariffs and economic uncertainty as near-term challenges. He also expressed confidence that RBC can overcome short-term headwinds.
Heritage advantage
Bank of Montreal (TSX: BMO) is a no-brainer choice for income-focused investors. The dividend pioneer’s payment history is as old as time. Imagine 196 years or 784 quarters of uninterrupted income streams. At $174.62 per share (+30.6% year to date), BMO pays a 3.78% dividend.
Recent filings by big funders with the U.S. Securities and Exchange Commission (SEC) reveal heightened interest in BMO. In Q1 fiscal 2025, Goldman Sachs and the Canada Pension Plan Investment Board (CPPIB) increased their positions in Canada’s oldest bank.
In the second quarter, Bank of New York Mellon Corp. and Campbell & Co. boosted their stakes in BMO. Institutional investors and hedge funds own 45.82% of BMO shares, according to recent reports.
Expect BMO’s growth in the Western and Midwest U.S.A. to accelerate due to its acquisition of Bank of the West from BNP Paribas in February 2023. Net income in the first three quarters of fiscal 2025 (nine months ended July 31, 2025), climbed 28% year over year to $6.4 billion.
Notably, the provision for credit losses (PCL) in Q3 fiscal 2025 declined 12% to $797 million versus Q3 of fiscal 2024. Darryl White, CEO of BMO Financial Group, notes the improving credit performance and strengthening profitability across the Canadian bank’s U.S. businesses.
Buy and hold, but do not sell
The decades-long dividend consistency of RBC and BMO is a powerful commitment to investors. You can’t ask for more because in exchange for your money, you get safety, income, and growth.
