There are strategic reasons for choosing one over the other. And if you invest in one or two Canadian bank stocks, you’ll likely hold them forever and never sell them.
Gold standard
Assuming the Big Five are precious metals, then Royal Bank of Canada (TSX:RY) is gold — not silver or copper. I say that because of its size and scale. The $298 billion financial institution is TSX’s largest company by market capitalization. Some analysts believe its superior business mix and lower lending exposure are its strengths.
Price is not an issue if dividend safety and peace of mind are your criteria. At $214.72 per share (+28.1% year to date), the dividend offering is 2.91%. RBC’s dividend payment record is 155 years and counting. Moreover, the modest yield is best for longer-term dividend growth. Even in the US, RBC is among the most preferred banking stocks.
RBC reported strong growth in each of its business segments in the third quarter (Q3) of fiscal 2025. In the three months ended July 31, 2025, net income rose 21% to $5.4 billion compared to the third quarter of fiscal 2024. The insurance division’s net income rose 45% to $247 million from a year ago.
According to president and CEO Dave McKay, RBC’s robust capital position (the company has a common equity tier-one ratio of 13.2%) supports solid volume growth. He maintains long-term optimism for the bank, but sees rates and economic uncertainty as short-term challenges. He also expressed confidence that RBC can overcome the short-term headwinds.
Heritage benefit
Bank of Montreal (TSX: BMO) is a no-brainer choice for income-oriented investors. The payment history of the dividend pioneer is as old as time. Imagine 196 years or 784 quarters of uninterrupted revenue streams. At $174.62 per share (+30.6% year to date), BMO pays a dividend of 3.78%.
Recent filings from major financiers with the US Securities and Exchange Commission (SEC) show that interest in BMO has increased. In the first quarter of fiscal year 2025 Goldman Sachs and the Canada Pension Plan Investment Board (CPPIB) have increased their positions in Canada’s oldest bank.
In the second quarter, Bank of New York Mellon Corp. and Campbell & Co. increased their stake in BMO. According to recent reports, institutional investors and hedge funds own 45.82% of BMO shares.
Expect BMO’s growth in the US West and Midwest to accelerate following the acquisition of Bank of the West from BNP Paribas in February 2023. Net income in the first three quarters of fiscal 2025 (nine months ending July 31, 2025) increased 28% year over year to $6.4 billion.
Notably, the provision for credit losses (PCL) fell 12% to $797 million in the third quarter of fiscal 2025 compared to the third quarter of fiscal 2024. Darryl White, CEO of BMO Financial Group, points to the improving credit performance and strengthening profitability at the Canadian bank’s U.S. operations.
Buy and hold, but don’t sell
RBC and BMO’s decades-long dividend consistency is a powerful commitment to investors. You can’t ask for more because in return for your money you get security, income and growth.
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