Outlook for Bank of Montreal Stock in 2025

Despite its mixed financial performance in recent quarters, BMO’s consistent focus on long-term growth initiatives and U.S. market expansion make it an attractive bank stock to watch in 2025.

| More on:
An investor uses a tablet

Source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

After a strong 22% rally over the past six months, Bank of Montreal (TSX:BMO) has continued its upward momentum in 2025, with the stock trading up nearly 4% year to date at $144.90 per share as of January 27. Investors seem increasingly optimistic about Canadian bank stocks, as better-than-feared economic conditions are creating a favourable environment for growth.

As Canada’s third-largest bank, with a market cap of $106 billion, BMO has long been a safe stock for cautious investors. But could BMO stock keep up its momentum in 2025? In this article, I’ll break down key fundamental factors that could impact its performance this year and explore whether the stock is still worth adding to your portfolio this year.

Main reasons for BMO stock’s recent rally

Two of the key factors behind Bank of Montreal’s strong stock performance in recent months are the broader optimism surrounding the Canadian banking sector and expectations of an improvement in its financial growth trends. Falling interest rates and easing inflationary pressures are expected to provide a supportive environment for loan growth, while improving credit quality could reduce the sector’s risk across the board. Investors expect BMO’s well-diversified business model and strong market position to help it benefit from these favourable economic conditions.

Also, BMO’s strong track record of rewarding its shareholders with reliable dividends year after year seems to be a major driver of its appeal to income-focused investors. Currently, the stock offers an annualized dividend yield of 4.4%.

Created with Highcharts 11.4.3Bank Of Montreal PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.ca

Mixed financial performance but strong capital position

Bank of Montreal’s financial performance in its fiscal year 2024 (ended in October) was largely mixed but still reflected resilience in a challenging environment. While the bank’s total revenue for the fiscal year rose 13.9% YoY (year over year) to $32.8 billion, its adjusted earnings were slightly down due mainly to higher provisions for credit losses.

In the latest quarter, BMO’s Canadian personal and commercial banking segment showed strength. The segment saw a 5% YoY revenue growth with the help of higher net interest income and deposit balances. Similarly, its wealth management posted a 35% YoY jump in quarterly revenue due to client asset growth, reflecting the bank’s ability to continue leveraging its wealth services despite economic uncertainties.

Lower margins and elevated provisions for credit losses in its U.S. personal and commercial banking segment affected BMO’s overall profitability. Nevertheless, it continued to strengthen its balance sheet, with its common equity tier-one ratio rising to 13.6% in the most recent quarter. This strong financial base provides the bank with enough flexibility for future investments.

BMO stock’s outlook for 2025

Bank of Montreal is trying to leverage AI (artificial intelligence) and other technological innovations to enhance its analytics capabilities to improve customer retention and operational efficiency. Moreover, the bank is continuing to improve its U.S. presence with its acquisition of Bank of the West, which is expected to drive growth in both commercial and retail banking. This strategic expansion could help BMO capture a larger share of the U.S. market while further diversifying its revenue streams going forward. Considering these factors, despite its mixed financial performance in recent quarters, BMO stock continues to be one of the most attractive bank stocks to watch in 2025.

Should you invest $1,000 in Bank of Montreal right now?

Before you buy stock in Bank of Montreal, consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and Bank of Montreal wasn’t one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $20,697.16!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 29 percentage points since 2013*.

See the Top Stocks * Returns as of 3/20/25

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Jitendra Parashar has positions in Bank Of Montreal. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Confidently Navigate Market Volatility: Claim Your Free Report!

Feeling uneasy about the ups and downs of the stock market lately? You’re not alone. At The Motley Fool Canada, we get it — and we’re here to help. We’ve crafted an essential guide designed to help you through these uncertain times: "5-Step Checklist: How to Prepare Your Portfolio for Volatility."

Don't miss out on this opportunity for peace of mind. Just click below to learn how to receive your complimentary report today!

Get Our Free Report Today

More on Bank Stocks

A worker drinks out of a mug in an office.
Bank Stocks

Royal Bank of Canada: Buy, Sell, or Hold in 2025?

Royal Bank is down 6% in 2025. Is it time to buy the dip?

Read more »

chart reflected in eyeglass lenses
Stocks for Beginners

Seize the Dip: Investment Opportunities Await This April

If you're looking for one and only one opportunity during a market dip, buy this top stock.

Read more »

hand stacks coins
Bank Stocks

Here’s How Many Shares of IGM Financial You Should Own to Get $1,000 in Yearly Dividends

Besides its attractive dividend income, IGM Financial’s strong long-term growth fundamentals could help its stock outperform the broader market in…

Read more »

A person looks at data on a screen
Bank Stocks

Where Will Bank of Montreal Stock Be in 5 Years?

These factors give Bank of Montreal (TSX:BMO) stock the potential to outperform the broader market in the next five years.

Read more »

calculate and analyze stock
Bank Stocks

Where Will TD Stock Be in 3 Years?

Here are some key reasons why I expect TD stock to reward patient investors handsomely over the next three years.

Read more »

Pile of Canadian dollar bills in various denominations
Bank Stocks

1 Dividend Stock Down 10.2% to Buy Now for Lifetime Income

A high-yield stock with a nearly 200-year dividend track record is a screaming buy right now.

Read more »

calculate and analyze stock
Bank Stocks

Why Smart Investors Own Canadian Financial Stocks

Top Canadian stocks like these could help smart investors get strong returns on their investments in the long run.

Read more »

customer uses bank ATM
Tech Stocks

2 Canadian Bank Stocks to Shield Against Market Downturns

Anchor your portfolio with dividends and stability built to outlast trade war turbulence with Royal Bank of Canada (RBC) and…

Read more »