BMO
Bank of Montreal (TSX:BMO) can be the financial anchor. In the third fiscal quarter of 2025, it reported net income of about $2.4 billion and adjusted net income of about $2.3 billion, with adjusted earnings per share (EPS) of $3.12. It also showed that provisions for credit losses were higher than a year earlier, which is a useful reminder that banking risk never completely disappears.
BMO is less about a quarter and more about the runway. If you reinvest dividends and hold cycles, a major Canadian bank can build up quietly. The rookie mistake is treating it like a guaranteed income product. It’s still a share. Credit losses can mount quickly as the economy slows, and bank stocks may fall before they recover.
H
Hydro One (TSX:H) is the more stable company within the group. In the third quarter of 2025, it posted basic earnings per share of $0.54 and adjusted earnings per share of $0.56, both higher than the previous year. It also approved a 6% dividend increase, raising the quarterly dividend to $0.32 per share starting in 2026.
The trade-off is that utilities can be sensitive to interest rates and valuations. When bond yields rise, utility stocks can slump even though activity is good. Hydro One also requires continued capital expenditures to maintain and expand the electric grid, so regulatory implementation and outcomes matter. Still, regulated profits can make them easier to hold than many cyclical stocks.
TRP
TC Energy (TSX:TRP) adds the infrastructure sleeve. In the third quarter of 2025, it reported comparable earnings of $1 billion, or $1.01 per share, comparable earnings before interest, taxes, depreciation, and amortization (EBITDA) of $2.6 billion, and cash flow from operations of $3.6 billion. It also announced a quarterly dividend of $0.96 per common share, highlighting progress on major projects and the planned spin-off of its liquids pipeline business.
If the Bank of Canada signals multiple cuts, it could help interest rate-sensitive names like utilities and pipelines. Lower interest rates can reduce refinancing pressure over time, and investors often pay more for long-lived cash flows when rates fall. The catch is that cuts can also mean growth slows down. With TC Energy, you still need to monitor leverage, project execution, and cost and demand trends.
XEQT
This is true iShares Core Equity ETF Portfolio (TSX:XEQT) makes its money. It is a one-ticket, all-equity portfolio that includes US, Canadian, developed international and emerging markets stocks and is automatically rebalanced. The cost of coverage is low, with a management expense ratio (MER) of 0.20%. Distributions are quarterly and modest, so think about growth and diversification first.
All told, BMO, Hydro One and TC Energy can operate as a simple Canadian trio because they diversify across financial services, regulated energy supply and energy infrastructure, and each has a meaningful income component. Add XEQT for global breadth, and you have a starter setup that’s easy to understand and easy to maintain. The best way to make it work is boring. Choose a distribution you can stick to, contribute regularly and let time do the hard work.
In short
A practical approach is to make the ETF your basis and then use the three stocks to add Canadian income. For example, you can keep about half in XEQT and divide the rest among the three. This is what $15,000 in XEQT could look like, and $5,000 in each share.
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | ANNUAL TOTAL PAYOUT | FREQUENCY | TOTAL INVESTMENT |
|---|---|---|---|---|---|---|
| XEQT | $40.52 | 370 | — | — | — | $14,992.40 |
| H | $53.88 | 92 | $1.33 | $122.36 | Quarterly | $4,956.96 |
| TRP | $75.67 | 66 | $3.40 | $224.40 | Quarterly | $4,994.22 |
| BMO | $184.43 | 27 | $6.68 | $180.36 | Quarterly | $4,979.61 |
Rebalance once or twice a year and reinvest the distributions while you are still building the TFSA. And ignore the daily market noise.
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