2 Stocks That Could Create Lasting Generational Wealth

TSX’s dividend pioneer and first dividend king are the best options for Canadians to create lasting generational wealth.

| More on:
Canada Day fireworks over two Adirondack chairs on the wooden dock in Ontario, Canada

Source: Getty Images

A family can have greater financial security for years by passing down financial wealth and assets to immediate family members. Financial wealth refers to money, savings, and investments, while assets refer to houses, real estate properties, and jewelry.    

However, those without hard assets to give or leave with heirs can build generational wealth through dividend investing. The stock market is not risk-free, although a long investment timeframe helps reduce risk and counter recurring volatility.

Canadians could create lasting generational wealth by investing in the Bank of Montreal (TSX:BMO) and Canadian Utilities (TSX:CU). The former is TSX’s dividend pioneer, while the latter is its first dividend king. The power of compound interest comes into play if you reinvest dividends (four times a year) from both stocks. Your capital grows faster and eventually becomes a fortune over time.

Dividend pioneer

BMO is Canada’s oldest bank and dividend pioneer. The dividend track record is 195 years and counting. The prevailing dividend yield of 5% is not the highest in the market, but it is sure to be safe and sustainable given the Big Bank’s solid payment history. You get peace of mind for the price of $126.33 per share.

The $91.3 billion financial institution has a stronger position and presence in the U.S. following the acquisition of the Bank of the West in February 2023. BMO finished the migration and integration of customers in March of this year. The Group’s CEO, Darryl White, said the acquisition added meaningful scale, expansion in attractive markets, and capabilities to drive greater growth, returns, and efficiencies.

Meanwhile, the appointment of Kristin Milchanowski as its new Chief Artificial Intelligence and Data Officer in mid-October signals the bank’s AI, data analytics, and robotics strategies to enhance business value. The Evident AI Innovation in Banking Index ranks BMO ninth in the world in AI innovation.

BMO is doing well after three quarters in fiscal 2024. In the nine months ending July 31, 2024, revenue and net income increased 12.2% and 45.7% year-over-year respectively to $23.8 billion and $5 billion. According to White, BMO is well-positioned to deliver sustainable returns to shareholders. Besides a strong balance sheet and robust capital and liquidity, strategic goals are firmly in place.

Dividend king

Utility companies are stable and safe choices for income-focused investors. The TSX has plenty, but Canadian Utilities stands out from the rest. This utility stock is Canada’s first dividend king, and the magic number is “52,” the longest record of annual dividend increases by a publicly traded company in the country.

At $35.68 per share, current investors enjoy a 16.8% year-to-date gain on top of the 5.2% dividend yield. The $9.6 billion company boasts a highly contracted and regulated earnings base, the foundation for sustained dividend growth. Management said the company will invest $4.6 to $5.6 million from 2024 to 2026 in regulated utilities to further grow cash flows and earnings.

Incredible feats

BMO and Canadian Utilities are compelling investments for their incredible dividend track record and dividend growth streak, respectively. The dividend pioneer or dividend king can help you build lasting generational wealth.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Christopher Liew has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

More on Dividend Stocks

exchange traded funds
Dividend Stocks

1 Top High-Yield Dividend ETF to Buy to Generate Passive Income

BMO Canadian Dividend ETF (TSX:ZDV) is a great income ETF for those seeking a safe but generous passive-income boost.

Read more »

ways to boost income
Dividend Stocks

TFSA Investors: 3 Dividend Stocks to Buy and Hold Forever

These dividend stocks are likely to consistently increase their dividends, making them attractive investment for your TFSA portfolio.

Read more »

how to save money
Dividend Stocks

Passive-Income Seekers: Invest $10,000 for $59.75 Monthly Income

Passive-income seekers can transform their money into monthly cash flow streams through dividend investing.

Read more »

happy woman throws cash
Dividend Stocks

2 Canadian Dividend Stars Set for Strong Returns

You can add these two fundamentally strong Canadian dividend stocks to your portfolio now and expect steady income and strong…

Read more »

Man in fedora smiles into camera
Dividend Stocks

Is it Better to Collect the CPP at 60, 65, or 70?

Canadian retirees can consider supporting their CPP benefit by investing in blue-chip dividend stocks with high yields.

Read more »

TFSA (Tax free savings account) acronym on wooden cubes on the background of stacks of coins
Dividend Stocks

2 TFSA Stocks to Buy Right Now With $3,000

These two TFSA stocks are perfect for those wanting diversification, long-term growth, and dividends to boot!

Read more »

The TFSA is a powerful savings vehicle for Canadians who are saving for retirement.
Dividend Stocks

TFSA: The Perfect Canadian Stocks to Buy and Hold Forever

Utility stocks like Canadian Utilities (TSX:CU) are often very good long-term holds.

Read more »

ETF stands for Exchange Traded Fund
Dividend Stocks

How to Use Your TFSA to Create $5,000 in Tax-Free Passive Income

Creating passive income doesn't have to be risky, and there's one ETF that could create substantial income over time.

Read more »