Should Income Investors Buy Bank of Montreal (TSE:BMO) Before Its Ex-Dividend?
If you are interested in cashing in on Bank of Montreal’s (TSX:BMO) upcoming dividend of CA$0.93 per share, you only have 3 days left to buy the shares before its ex-dividend date, 30 April 2018, in time for dividends payable on the 28 May 2018. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I take a deeper dive into Bank of Montreal’s latest financial data to analyse its dividend attributes. View our latest analysis for Bank of Montreal
5 checks you should do on a dividend stock
Whenever I am looking at a potential dividend stock investment, I always check these five metrics:
Is it the top 25% annual dividend yield payer?
Has it paid dividend every year without dramatically reducing payout in the past?
Has the amount of dividend per share grown over the past?
Is it able to pay the current rate of dividends from its earnings?
Will the company be able to keep paying dividend based on the future earnings growth?
Does Bank of Montreal pass our checks?
The current trailing twelve-month payout ratio for the stock is 50.43%, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting lower payout ratio of 43.54%, leading to a dividend yield of around 4.06%. However, EPS should increase to CA$8.23, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment. If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. BMO has increased its DPS from CA$2.8 to CA$3.72 in the past 10 years. During this period it has not missed a payment, as one would expect for a company increasing its dividend. These are all positive signs of a great, reliable dividend stock. Compared to its peers, Bank of Montreal generates a yield of 3.83%, which is on the low-side for Banks stocks.
Next Steps:
Considering the dividend attributes we analyzed above, Bank of Montreal is definitely worth keeping an eye on for someone looking to build a dedicated income portfolio. Given that this is purely a dividend analysis, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. Below, I’ve compiled three relevant aspects you should look at:
Future Outlook: What are well-informed industry analysts predicting for BMO’s future growth? Take a look at our free research report of analyst consensus for BMO’s outlook.
Valuation: What is BMO worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether BMO is currently mispriced by the market.
Other Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
