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2 Premier Stocks That Can Pay You Rock-Steady Dividends for Life

Christopher Liew, CFA
Canadian Dollars

Long-term investing is the appropriate strategy if your goal is to secure your financial future. The success, however, depends on your investment choices. If you want higher returns, the stock market has historically delivered a higher return on investment than other assets or financial instruments.

Ideally, you should be looking for companies that can pay you rock-steady dividends for an extended period, if not for life. You need to limit your selection to high-quality stocks. Bank of Montreal (TSX:BMO)(NYSE:BMO) and Bank of Nova Scotia (TSX:BNS)(NYSE:BNS), or Scotiabank, are the perfect examples.

Both banks meet the criteria of a great investment in terms of business model, market position, financial strength, and dividend history. If the stocks are your core holdings, you can look forward to a lifelong financial backing.

Top choice

A dividend all-star or a company with at least 20 consecutive years of dividend payments is the logical choice. But BMO is more than just a dividend all-star. This bank is the “mother of all dividend stocks” as it was the first Canadian company to pay dividends to shareholders. The streak began in 1829.

BMO’s 190-year track record is nothing short of exceptional. Based on this longest streak, it’s safe to conclude that the bank has a solid balance sheet, profitable, and the ability to generate bounteous cash flow. BMO possesses the qualities of a stock that can sustain your future financial needs. At present, the yield is 4.11%.

BMO’s next goal is to become a Top-10 North American investment bank by 2023. The bank is scaling up its investment banking business in the U.S. It hopes to double its market share and achieve a 10% annual revenue growth across the border.

Next-best option

Scotiabank’s dividend history is as illustrious as BMO’s track record. The third-largest bank in Canada has been paying dividends since 1832. Again, it’s a confirmation of its reliability and dependability as a long-term income provider. The current yield is 4.77%.

This $92.77 billion banking giant is a consistent dividend payer because of its policy to relate dividend to trend earnings. It means the bank can still grow its yield in spite of cyclical downturns and bear markets, including a recession.

The domestic retail business is Scotiabank’s primary profit earner, although its strong international presence is also fueling growth. As a cushion to a potential slowdown at home, Scotiabank continues to expand its operations in emerging markets such as Latin America and the Caribbean.

Scotiabank’s strategy to not focus on the U.S. business alone and be present in more than 50 countries in Latin America is proving successful. Soon, you can expect the business segments in Latin America, Asia, and the Caribbean to generate as much profit as Scotiabank’s core domestic retail business.

Lifetime income

Both BMO and Scotiabank went through the severest global economic turmoil in the distant and recent pasts. Today, the two Canadian banks continue to be consistent dividend plays and excellent sources of lifetime income. You can succeed as a long-term investor with only this pair of high-quality stocks.

More reading

Fool contributor Christopher Liew has no position in any of the stocks mentioned. The Motley Fool recommends BANK OF NOVA SCOTIA.

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