Building a portfolio dividend yield is a great way for investors to generate a consistent income while maintaining long-term growth and stability. Rather than relying on a single sector or one stock, investors can combine multiple TSX stocks to create a balanced yield that grows over time.
So then, where do investors looking to establish a portfolio dividend yield turn to?
The first step is picking the right stocks to meet that challenge, and the market provides great candidates to choose from. These are stocks that offer established dividend histories and decades of growth.
More importantly, those stocks are diversified across multiple sectors to add some defensive appeal, too.
Here’s a trio that can deliver that combined portfolio dividend yield investors seek.
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Start with long-term stability
Utility stocks are some of the most defensive options on the market available to investors. And among those utility stocks, Fortis (TSX: FTS) is the one that Canadian investors looking to grow that portfolio dividend yield should consider.
Utilities are known for their ability to generate steady and recurring revenue streams irrespective of how the broader economic conditions are. Part of the reason for that can be attributed to the lucrative business model they follow.
Utilities like Fortis provide an essential service. In the case of Fortis, that’s electricity and natural gas distribution. That service is in turn backed by long-term contracts that span decades.
The resulting revenue stream from those contracted services is both recurring and stable, and this allows Fortis to invest in growth initiatives and pay a handsome dividend.
As of the time of writing, that dividend yields 3.29%. Fortis has also amassed an impressive 53-year streak of annual dividend increases, making it an attractive option for investors seeking a solid portfolio dividend yield.
Energy infrastructure provides a recurring, growing income
Enbridge (TSX: ENB) is one of the largest energy infrastructure companies on the planet. Enbridge is responsible for transporting massive amounts of crude oil and natural gas each day, making it a highly defensive pick.
The pipeline and storage business operates under long‑term contracts, operating more like a utility or toll road. While the pipeline business is Enbridge’s largest segment, it’s not the only revenue generator.
Enbridge also boasts a growing renewable energy business and a natural gas utility. Like the pipeline business, both generate a recurring revenue stream backed by regulated long-term contracts.
The predictable revenue generated across all of Enbridge’s segments allows the company to invest in growth from its multi-billion-dollar backlog and pay its quarterly dividend.
As of the time of writing, that dividend offers a yield of 5.33%. And like Fortis, Enbridge has provided annual upticks to that dividend for over three decades without fail.
Between the multiple revenue-generating segments, the highly defensive nature of Enbridge’s pipeline business and its growing dividend, the company is hard to ignore. That’s especially true for investors seeking a solid portfolio dividend yield.
Bank of Montreal provides balanced income and growth potential
It would be hard to assemble a list of stocks with a solid portfolio dividend yield and not mention at least one of Canada’s big bank stocks.
The bank stock to include in this combined portfolio dividend yield is Bank of Montreal (TSX: BMO). BMO is the oldest of Canada’s big banks, with an impressive streak of operations and dividends going back nearly two centuries.
Today, BMO offers personal banking, commercial lending and wealth management across both its domestic and U.S. operations.
BMO’s U.S. presence has grown in recent years and now extends to 32 state markets. The segment serves as BMO’s primary growth market.
Turning to dividends, BMO offers a quarterly dividend that carries a yield of 3.21%. The bank has paid that dividend uninterrupted for nearly two centuries.
For investors seeking a mix of stability and long‑term growth, BMO adds another layer to the defensive nature of Fortis and the higher yield of Enbridge.
Should you seek a stronger portfolio dividend yield?
The three stocks above create a portfolio dividend yield that draws strength from multiple sectors. Collectively, the three offer a blended yield of 3.94%, while offering growth, income and defensive appeal.
In my opinion, one or all of these should be core holdings in any well-diversified portfolio.
