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Highlights
- Fortis Inc is on course to pay a quarterly dividend of C$ 0.535.
- BMO posted an annualized dividend growth rate of almost seven per cent in five years.
- The bank’s return on equity (ROE) was nearly 21 per cent.
Finding quality income stocks can be confusing if you have just stepped into the investment world. Plenty of stocks are available in the stock market that pays dividends, but not all the dividend stocks can qualify as quality income stocks.
Income investors with a skilled eye generally look beyond the surface and thoroughly conduct quality checks about the business and analyze its dividend history to ensure future income flow. Keeping that in mind, here are two TSX income stocks that one can consider if seeking income flow in the long term.
Also read: Understanding undervalued stocks and where to find them
1. Fortis Inc (TSX: FTS)
Investing in a top utility company like Fortis Inc could help you diversify risk in addition to potential capital gains and income streams in the long run.
Fortis is a diversified utility company with electricity and gas transmission and distribution operations in North America. The C$ 29 billion market cap utility company had a dividend yield of over three per cent, as of writing this, and is on course to pay a quarterly dividend of C$ 0.535.
The large-cap company recorded an annualized dividend growth rate of nearly six per cent over the past five years.
Fortis Inc is also targeting a greenhouse gas (GHG) emission reduction of 75 per cent by 2035, in line with its final goal of ‘2050 net-zero direct GHG emission’. With the growing importance of clean and renewable energy and a sustainable future, this move of Fortis could significantly help in the coming future.
2. Bank of Montreal (TSX: BMO)
Bank of Montreal is another investment option for income investors, particularly keeping the current market environment in mind. Inflation worries and resultant rate hikes to control it seem to affect the stock market broadly.
However, following the central bank’s interest rate hike, stocks like BMO also raised their prime rate to 3.7 per cent. Hence, adding BMO could help mitigate possible interest rate impacts on your portfolio.
Apart from this, BMO’s dividend yield was over four per cent. This TSX bank is also scheduled for a quarterly dividend payment of C$ 1.39 on August 26.
Bank of Montreal posted an annualized dividend growth rate of almost seven per cent in five years. The bank’s return on equity (ROE) was nearly 21 per cent.
2 TSX income stocks to buy for long term: Fortis (FTS) and BMO
Bottomline
Fortis Inc and Bank of Montreal are widely known among investors for their dividend practices and sound business operations. These TSX income stocks provide exposure to the utility and bank sectors, which are generally less cyclical. Hence, suitable for low-risk investors seeking dividend income.
Also read: 5 TSX stocks to buy for +5% dividend yield - GWO, ENB, RNW, MFC, SRU
Please note, the above content constitutes a very preliminary observation based on the industry, and is of limited scope without any in-depth fundamental valuation or technical analysis. Any interest in stocks or sectors should be thoroughly evaluated taking into consideration the associated risks.
