Bank of Montreal (TSX:BMO): A Superb Growth and Income Stock

There are few stocks on the market that can provide superb growth and income potential. Bank of Montreal (TSX:BMO)(NYSE:BMO) can offer both.

Finding the right mix of investments for your portfolio is something that takes time and a lot of patience. Fortunately, there are some stellar options to add to your portfolio on the market today. One such option is Bank of Montreal (TSX: BMO)(NYSE: BMO), which is a superb growth and income stock.

What sets Bank of Montreal apart from its peers?

Canada’s big banks are some of the best long-term investments on the market. There’s a good reason for that view. The banks offer a juicy yield, a stable domestic network that generates revenue, and a growing international segment.

But what sets BMO apart from its peers as a superb growth and income stock? That comes down to several key points.

First, let’s talk about results. BMO has an established branch network in Canada that generates oodles of cash for the company. In the most recent quarter, BMO’s domestic segment reported a net income of $1,001 million, reflecting a 34% gain over last year.

It’s not just BMO’s domestic segment that posts impressive gains. Overall, the company reported a net income of $2,933 million, or $4.43 per share, in the most recent quarter. When compared with the same quarter last year, that works out to an impressive 45% and 46% gain, respectively.

Those superb results help pave the way for my second point — growth.

Incredible growth

When Canada’s big banks look to expand, they usually (with one exception) turn to the U.S. market. In recent years, BMO has established itself in the Chicago area through its BMO-Harris brand. Net income from that segment came in at $681 million in the most recent quarter. This works out to an impressive 18% gain year over year.

What prospective investors should know is that BMO’s presence in the U.S. market is about to get supercharged. Late last year, BMO announced a $16 billion deal to acquire Bank of the West. The deal will expose BMO to the markets of California, Colorado, and Nebraska.

Collectively, the deal will add over 500 branches to BMO’s U.S network, and by extension, 1.8 million new customers. In short, the long-term growth potential from this deal is huge and might just be the deciding factor for some investors.

And I still haven’t mentioned the other half of that superb growth and income equation: BMO’s dividend.

Who wants income?

One of the main reasons why investors continue to flock to Canada’s big banks is for the dividend that they offer. In the case of BMO, that dividend is one of the most impressive and well established on the market.

BMO has been paying out dividends without fail for an incredible 193 years. That literally defines the buy-and-forget mantra, but there’s still more to consider. BMO has provided annual upticks to that dividend going back decades. The only recent gap in that cadence came during the pandemic, which was forced upon the banks.

Fortunately, when the moratorium on dividend hikes was lifted, BMO announced a juicy 25% hike to its dividend. Today that quarterly dividend works out to a juicy yield of 3.67%.

This means that prospective investors buying $35,000 of BMO will earn an income of just shy of $1,285 in the first year. Keep in mind that investors not ready to draw on that income can reinvest those dividends for huge gains over the longer term.

Superb growth and income could be yours!

No stock is without at least some risk, and that includes BMO. Fortunately, the bank is well-diversified and in a prime position to continue growing.

In my opinion, BMO is a superb growth and income stock that should be a core holding in every well-diversified portfolio.

Fool contributor Demetris Afxentiou has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

More on Bank Stocks

Real estate investment concept with person pointing on growth graph and coin stacking to get profit from property
Stocks for Beginners

Canada’s Job Market Could Decide What Happens to Mortgage Rates Next

Canada’s jobs report can influence mortgage expectations, but fixed and variable rates move through different channels.

Read more »

some investments are riskier than others
Stocks for Beginners

OSFI’s Risk Outlook Could Test Canadian Banks: Royal Bank Looks Prepared

RBC enters a more cautious regulatory environment with strong capital and substantial dividend coverage.

Read more »

A person uses and AI chat bot
Bank Stocks

Royal Bank Stock: Why I’d Buy It Now for the Next 5 Years

Royal Bank just posted record profit and an 18% ROE. Here's why RBC stock looks like a smart buy for…

Read more »

customer uses bank ATM
Bank Stocks

I Found the Ideal Retirement TFSA Stock Paying 3.6%

Bank of Nova Scotia (TSX:BNS) might be worth a spot in your TFSA on the dip.

Read more »

Safety helmets and gloves hang from a rack on a mining site.
Stocks for Beginners

Canada’s Jobs Report Lands Friday: This Bank Stock Could Move First

Friday’s jobs report could shake CIBC shares, but borrower stress matters more than one headline number.

Read more »

senior couple looks at investing statements
Bank Stocks

The OAS Clawback: How Canadians Can Plan Around It

Earn too much in retirement and the CRA quietly takes your OAS back. Here's how the clawback works and 6…

Read more »

TFSA (Tax-Free Savings Account) on wooden blocks and Canadian one hundred dollar bills.
Bank Stocks

How to Use Your TFSA to Potentially Double Your Annual Contribution

Your TFSA limit is $7,000, but you may be able to put $14,000 to work this year. Here are 3…

Read more »

customer uses bank ATM
Stocks for Beginners

Your GIC Is Maturing as Rates Rise: I Wouldn’t Automatically Lock It Up Again

A maturing GIC may offer an attractive guaranteed rate, but long-term investors could sacrifice considerably more growth by renewing automatically.

Read more »