The big Canadian bank stocks are sailing through earnings season. And thus far, it’s proven to be quite rough waters, with shares of Bank of Montreal (TSX:BMO) recently nosediving following the release of some sub-par results. Of course, not all banks fell flat upon clocking in their results.
Macro headwinds have weighed heavily, and they could continue to do so as we move choppily into year’s end, with a potential Canadian recession that may just be right around the corner. Still, not all banks are created equally, with some having the ability to ride out rougher tides than others.
The rocky road ahead for the big banks
Undoubtedly, the Bank of Canada may be ready to turn a corner on interest rates. And while doing so may provide a bit of relief to consumers, I’m not so sure bank investors should play the interest rate game, as many growth-focused investors may be inclined to do at this juncture. At the end of the day, the banks are going to continue to be turbulent names to trade.
That said, over the long run, I continue to view them as some of the bluest blue chips on the planet. As the bank stocks take yet another hit to the chin, value-focused passive income seekers may be able to squeeze out a bit more dividend yield for a lower price of admission.
So, while others view the big bank stocks as dead money, I view them as terrific plays for dividend hunters over the long haul. While I have no idea (nor does anybody else on Wall or Bay Street!) where the Canadian bank stocks are headed next month, next quarter, or even next year, I do view them as having attractive dividend payouts and long-term risk/reward profiles.
All considered, I consider the broader bank stocks (the Big Six, as they’re often referred to) as some of the market’s best bargains today.
Without further ado, let’s look at one top bank stock I’ll be watching very closely this coming week as it looks to pull the curtain on its quarterly earnings results.
Bank of Montreal
Bank of Montreal reported some pretty unimpressive quarterly results, thanks in part to higher provisioning activity. Indeed, expectations were quite muted going into earnings season. So, the fact that Bank of Montreal still managed to disappoint, I believe, is a testament to just how rough things are in the Canadian banking waters this time of year.
Indeed, BMO stock was down around 3.6% after the release of the results. I view the dip as nothing more than an opportunity to get a solid franchise at a slight discount. The stock boasts a nice 4.76% dividend yield after falling closer to around $122 and change per share.
Though shares of BMO demand patience, I do think it could become more attractive as shares pull back after the abrupt rally since the depths of last year. If a 5% dividend yield is in the cards again, investors should watch the name closely.
The Foolish bottom line
Bank of Montreal and the rest of the big banks seem like compelling buys if you like low-cost dividend plays. After the post-earnings flop, BMO stock looks like a great pick-up.
