3 Dividend Stocks to Buy and Hold Forever | The Motley Fool Canada

3 Dividend Stocks to Buy and Hold Forever | The Motley Fool Canada: "This company hasn't missed a dividend payment since 1829: Bank of Montreal
Company Snapshot: (data as of May 13, 2014)

Market cap: $50.1 billion
Recent share price: $77.81
Trailing P/E: 12.3
Price/Book Value: 1.3
Since 1829, almost four decades before Canadian Confederation, this company has been paying dividends to its loyal shareholders.

Think of everything that has happened since that time… two world wars…the Great Depression… dozens of financial panics… stock market bubbles… the list goes on. Yet this stock coasted through all of this turmoil without skipping a single dividend payment to investors.

In fact, through many of these volatile times the company actually increased its dividend. And if history is any guide, it will continue cranking out dividends for another century to come.

This stock is, of course, the Bank of Montreal (TSX: BMO)(NYSE: BMO).For 186 consecutive years the company has managed to pay a dividend to shareholders — the longest streak of any publicly traded company in Canada.

How has Bank of Montreal been able to pull this off?

Well good ol' fashion Canadian conservatism for starters. Investors have always complained that the country's banks are too stodgy. But that has been an essential ingredient of their success.

At no other time was this more apparent than during the recent financial crisis. While international bankers indulged in exotic subprime loans and collateralized debt obligations, Bay Street was left relatively untouched. And even if our banks are tempted to chase returns, the Federal government maintains strict regulations on capital reserves, mortgage lending, and foreign ownership.

Moreover, Canada's banking industry is an oligopoly (code for very profitable). The country's seven largest banks account for over 93% of assets in the nation's financial system. This gives them such economies of scale that it's almost impossible for new industry entrants to compete.

And even if you had the billions of dollars needed to enter this industry, it would be difficult to acquire customers. To move all your accounts to another institution is a hassle. Most customers stay loyal to the same bank their parents started at.

All of this means that Bank of Montreal can generate excess returns year after year without the worry of a competitor driving down margins. That has translated into a growing stream of dividend cheques for shareholders."



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