H
Hydro One (TSX:H) is the kind of dividend stock that offers stable, essential and reliable dividends, backed by the most predictable business model in the world. TSX. The dividend stock is Ontario’s largest electric transmission and distribution company, responsible for providing power to nearly 1.5 million people and businesses in the province. The network is vast, covering approximately 98% of Ontario’s geography. What makes this company so powerful for investors is that it is fully regulated. Whether markets rise or crash, people still turn on their lights, charge their cars and heat their homes, and Hydro One gets paid for it.
Financially, Hydro One has one of the strongest profiles in the Canadian utility sector. In its most recent quarterly report, the dividend stock posted revenue of $2.1 billion, up modestly year-over-year, and net income of $327 million, up from $292 million. Cash flow is stable enough to finance both capital expansion and regular dividend increases. Hydro One’s regulated model allows it to recoup costs and deliver stable returns on every dollar invested in infrastructure upgrades.
That stable income translates directly into shareholder returns. The dividend stock pays a yield of around 2.5%, which may not be the highest on the TSX, but is one of the most reliable. More importantly, Hydro One has increased its dividend every year since its IPO in 2015, typically by 5% per year. The payout ratio of around 60% of profits is comfortably sustainable and leaves room for reinvestment and gradual growth. Those dividends can build up quietly, creating a growing stream of tax benefits for decades.
BMO
Bank of Montreal (TSX:BMO) belongs in every long-term portfolio as Canada’s oldest bank, founded in 1817. BMO has weathered every major economic cycle while delivering stable dividends and long-term growth. Its core strength comes from its diversified business model, which balances traditional retail banking with asset management, capital markets and a growing U.S. presence. The bank serves more than 13 million customers in North America and has steadily expanded its reach in the United States through the acquisition of Bank of the West, which closed in 2023. That deal immediately strengthened its U.S. footprint, especially in fast-growing markets in the Midwest and California, positioning BMO for decades of cross-border expansion.
Financially, BMO is one of the most disciplined institutions on the TSX. It maintains a strong capital position, with a Common Equity Tier 1 (CET1) ratio of approximately 13.5%, well above regulatory minimum requirements. In its most recent quarterly report, BMO posted net income of $2.3 billion, up a whopping 25% from the previous year. Even during a period of higher credit losses and cautious consumer spending, BMO continues to generate robust revenues thanks to its cost controls and diversified revenue streams.
Where BMO really shines is in its dividend legacy. It has paid a dividend every year since 1829, the longest continuous dividend record of any Canadian company. Today it yields around 3.8%, backed by a 55% payout ratio. That income stream is not only stable, but growing, with BMO increasing its dividend regularly, usually twice a year. For investors looking for passive income, these dividends will compound beautifully over time, creating an ever-growing income stream.
In short
If you want sustainable passive income, look for companies that offer essential services and growing dividends. These two dividend stocks may not be the most exciting, but the income you can generate certainly is. Here’s how much $7,000 invested in each dividend share could earn you.
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY | TOTAL INVESTMENT |
|---|---|---|---|---|---|---|
| H | $51.92 | 134 | $1.33 | $178.22 | Quarterly | $6,954.28 |
| BMO | $172.00 | 40 | $6.52 | $260.80 | Quarterly | $6,880.00 |
All together, BMO and H offer a perfect combination for investors looking for dividend income that is not only sustainable, but also growing.
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