Canadian investors with holdings in Bank of Montreal (TSX: BMO) stock must be very happy with its performance so far in 2025. As of this writing, BMO stock trades for $179.87 per share, up by 49.64% from its 52-week low.
For investors who bought the company’s shares at its 52-week low, BMO stock has been a dream come true, outpacing the rest of the stock market during its bull market run. Year to date, BMO stock is up by 28.67%. The S&P/TSX Composite Index, which is the benchmark index for the Canadian stock market, is up by 19.56% in the same period.
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About BMO
BMO is a $128.84 billion market-cap diversified financial services provider. It is the oldest bank in Canada, founded in 1817. The bank has paid its investors shareholder dividends each year without fail since 1829, making it one of the few stocks with an almost two-century-long history of uninterrupted dividends. The bank has managed to continue paying investors regular distributions through multiple wars, economic downturns, and shifting interest rates.
The company’s historical strength is what makes it a solid holding in many self-directed investment portfolios, and it continues to remain strong. In its most recent quarter, BMO stock reported a 22% growth in its adjusted earnings per share compared to the same period last year. Its common equity tier-one ratio hit 13.5%, reflecting plenty of room to cycle bumps in the credit cycle and a solid capital position.
More growth
BMO has a balanced approach to domestic and U.S.-based banking operations that sets it apart from its Big Six Canadian bank peers. The company’s commercial and personal banking segment in the U.S. had a 51% uptick. The bank also plans to acquire Burgundy Asset Management, a move that will expand its footprint into wealth management for the ultra-high-net-worth individuals. This space will give BMO more room for growth due to the fee-based income that is less sensitive to interest rates than lending margins.
Dividend potential
BMO is a reliable dividend stock. At current levels, BMO stock boasts a 3.62% dividend yield, paying $1.63 per share per quarter to its investors. The uptick in its share prices in 2025 so far has deflated its dividend yield. BMO has a payout ratio of 55.74% at writing, leaving room for even further dividend growth.
The bank’s management has also approved share buybacks of up to 30 million shares, effectively setting itself up to provide significantly greater value to shareholders.
Foolish takeaway
If you are an investor considering a safe stock to generate a passive income, BMO stock can be an excellent pick for your self-directed portfolio. Investors who already have significant holdings in the stock might feel tempted to invest in more shares, and those without a position might also find it attractive. However, it might be better to wait for a correction to come along so that you can get in at a safer entry point for more returns through capital gains in the long run.
