Investors play favourites when picking stocks. However, Tax-Free Savings Account (TFSA) holders maintain a higher standard and are more discriminating when scouting the market. The stock must not only be a favourite but also deserving of a permanent spot in the tax-advantaged account.
Canada’s banking sector is a bedrock of stability, making any of the Big Six staples for a TFSA portfolio. However, if you’re evaluating these giant lenders based on longevity and dividend reliability, Bank of Montreal (TSX: BMO) sets the highest bar. No investor will outlive its 197-year dividend track record (and counting).
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Buy and forget anchor
BMO, the TSX’s dividend pioneer, started sharing a portion of its profits as dividends with shareholders in 1829. The quarterly payouts were uninterrupted, notwithstanding two World Wars, the Great Depression, modern financial crises, a global pandemic, and the 2026 oil supply crisis.
Because of strong profitability in Q2 and the first half of fiscal 2026, Canada’s oldest and third-largest bank announced a 5% dividend increase from a year ago. If you invest today, the share price is $253.33, while the dividend yield is 2.7%.
A $25,000 investment inside a TFSA will produce $168.75 in tax-free passive income every quarter. If you’re saving for retirement and reinvesting dividends, your TFSA will compound to $42,822.40 in 20 years.
Performance-wise, BMO is crushing the broader market, up 45% year-to-date compared to the TSX’s plus-15% return. This Big Bank stock is a total return engine in 2026, given the strong price surge on top of the ultra-safe dividend.
Financial highlights
In the three months and six months ending April 30, 2026, BMO’s net income climbed 34% and 25% year-over-year, respectively, to $2.6 billion and $5.1 billion. The provision for credit losses (PCLs) declined 30% year-over-year in Q2 fiscal 2026 to $739 million.
BMO acquired the Bank of the West in the U.S. in 2023 and expects to expand business activity and capture growth opportunities. Its U.S. president, Aron Levine, said BMO aims to become a leader in California’s commercial banking. Tony Sciarrino, head of BMO’s U.S. commercial bank, said his mission is to achieve top-5 bank status.
According to Darryl White, CEO of BMO Financial Group, each of the businesses delivered strong results in Q2 fiscal 2026. The U.S. banking division reported a 32% increase in net income to $790 million compared to Q2 fiscal 2025. Meanwhile, net income of Capital Markets and Wealth Management rose 47% and 34% year-over-year to $638 million and $428 million.
White also notes the solid sequential commercial banking loan growth in both the U.S. and Canada. He added that the bank opened the BMO Institute for Applied Artificial Intelligence & Quantum to advance its AI strategy. He added that BMO commits to innovating, developing, and integrating technologies that will shape the future of financial services.
Forever stock
BMO, my absolute favourite TFSA stock, is far more than just a Big Bank to hold for the long term. While short-term share price fluctuations are always possible, the dividend payouts will continue. Because it deserves a permanent spot in my account, I will never sell my shares, but plan to accumulate more on future dips.
