BMO Update and Lots More

by Mike Holman

The Bank of Montreal (BMO) raised their dividend to $0.70 today from $0.68 which is up from $0.65 that was paid out earlier in the year. This stock is the only stock in my leveraged portfolio and since one of the cornerstones of my leveraged plan is dividend increases, I was pretty pleased. In 2007, BMO has raised their dividend by 7.7% which is above my long term assumption of 5% annual dividend growth. The current yield based on today’s closing price is 4.26% which is pretty good especially if you are doing a leveraged plan like I am and need some dividend income to cover the interest costs.

An excellent website called Dividends Matter has an analysis on BMO which is worth checking out.

Now they did have a bit of an earnings drop but considering it was mostly from a trading problem which has ended (although they keep reporting losses from it) so I’m not worried about it.

Yesterday I posted a review of chapter one from Richard Bach’s book “Smart Couples Finish Rich”. Coincidentally, Brip Blap is hosting a book giveaway with Bach’s book as the main prize – so head on over and leave a comment and you might win this excellent book.

In other news I entered the latest Carnival of Personal Finance hosted by Free Money Finance so go check it out! I haven’t actually read any of the other posts, other than the ones from blogs I normally read so if you find any good ones, please let me know.

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{ 6 comments… read them below or add one }

1 moneygardener

An interesting thing that I’ve notice with BMO compared with Canada’s other big banks with repsect to dividends is that BMO seems to raise it’s dividend in no apparent pattern. They don’t raise once a year (every 4 payments), and they dont’ raise twice a year (every 2 payments). This has allowed them to recently be quite the aggressive dividend grower.

For example in 2006 they paid $2.26

So far in 2007 they’ve paid $0.65 + $0.68 + $0.70 + $0.70 (expected assuming no raise) = $2.73

This represents a year over year raise of at least 21% assuming they do not raise their last payment of 2007. It’s an interesting way to go about it. Holding BMO, it must be interesting to not know what will happen and be surprised with several small increases that add up to a large annual raise.

2 FourPillars

MG – I did think it was a bit odd to raise the dividend by 2 cents considering they already raised it this year and they had some big losses from the trading. 21% increase is pretty huge.

Mike

3 moneygardener

good idea Balki

4 FourPillars

Lol – I’m not sure I want to see that Mr. Cheap.

Mike

5 TheFinancialBlogger

At $65,40, BMO is definitely a good stock to buy. However, they are not the only bank offering over 4% in dividend. National Bank (4,3%) is also a good pick. I don’t know if BMO will be able to keep this rhythm, they are distributing more in dividend than any other banks as well.

6 FourPillars

FB – thanks for the insider trading tip 🙂

I’ll keep an eye on National Bank as well.

Mike

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