It’s a pretty impressive track record.
There is only one problem. Instead of sticking to those excellent long-term dividend kings, investors are getting a little cute. They take care of smaller stocks, attracted by a succulent return, an opportunity of deep value or better growth potential. Sometimes these investments work, but often not.
There is nothing wrong with this approach. After all, diversification is a good thing. But I still think the foundation of the average Canadian investment portfolio should be these kings of dividends, the kind of companies you can count on no matter what.
This is doubly important in a COVID-19 world.
Let’s take a closer look at three of Canada’s biggest dividend kings, stocks that have paid investors steadily for at least 100 years.
Bank of Montreal
You might as well start at the top. Bank of Montreal (TSX: BMO) (NYSE: BMO) has the longest dividend sequence in Canada. He started paying a dividend in 1829 and has not missed any payments since then. It’s a remarkable record.
BMO is hardly the largest bank in Canada. This is only the fourth. But it’s still a great company with a market capitalization over $ 45 billion. The company operates in the retail, commercial and capital markets in Canada and the United States. It is also a large wealth manager on both sides of the border and a major player in the market for exchange traded funds. In fact, BMO was the first major Canadian bank to expand into the United States.
Today is a great opportunity to buy cheap BMO stocks. Despite a significant rally earlier in the week, this dividend king is trading at just 8 times his profit and slightly below his book value. These are the cheapest stocks since 2009. BMO also pays a succulent 6% dividend yield, about 50% more than normal.
Imperial oil (TSX: IMO) (NYSEMKT: IMO) has been a pillar of the Canadian energy industry for over a century, and its history dates back to John D. Rockefeller and Standard Oil. The company has paid constant dividends for most of its history since the 1880s.
This dividend king has undoubtedly been hit by the recent collapse in oil prices, but he easily has the strength of the balance sheet to survive. Its oil sands operations are among the best in the industry, producing some 400,000 barrels of bitumen every day. Long-term reserves are also excellent, exceeding 6 billion barrels. And investors must love the company’s downstream operations, which include several refineries and a fleet of Esso service stations. It also provides fuel for Mobil brand stations in Canada.
Imperial Oil has not only paid consistent dividends recently. He increased his payment for 25 consecutive years. It’s a great record. Combine that with the current yield of 3.9% and this is an attractive opportunity.
BCE Inc. (TSX: BCE) (NYSE: BCE) was founded in 1880, just a few years after Alexander Graham Bell invented the phone. He paid his first dividend to investors the following year and has not looked back since. It’s a dividend sequence of almost 140 consecutive years for this dividend king.
BCE looks stronger today than ever. The company is the leading telecommunications provider in Canada, connecting more than 13 million customers to wireless data, cable TV, the Internet and home phone services. He also has clients from coast to coast. It also has a handful of interesting media assets, including the best TV stations, a collection of radio stations, the Crave video streaming service, and songs from several major sports franchises.
This dividend king also offers an excellent payout today. The current yield is 5.9%, a payment supported by profits. BCE is a mature business today, which means it can easily afford to pass most of its cash flow back to investors.
The bottom line on these dividend kings
Don’t try to reinvent the wheel. The smart decision is to stock up on dividend kings like Bank of Montreal, Imperial Oil and BCE for your income needs. It has worked for the last century, and it also looks good for the next century.
Freshly published! 5 actions under $ 49 (FREE REPORT)
Motley Fool CanadaThe market-beating team has just released a brand new FREE report revealing 5 “cheap” stocks that you can buy today for less than $ 49 per share.
Our team thinks that these 5 stocks are extremely undervalued, but more importantly, could potentially make Canadian investors quick to act.
do not miss anything! Just click the link below to grab your free copy and find out 5 of these stocks now.
The insane contributor Nelson Smith owns shares of BANK OF MONTREAL, BCE INC. And IMPERIAL OIL.