There are still so many great dividend stocks that have plenty to offer on the yield front. Beyond just the upfront dividend yield, though, some of the standout dividend stocks also have a lot to offer in terms of growth.
For long-term investors, capital gains and, perhaps more importantly, dividend growth ought to be the main draws for investment dollars. It can be tough to strike the right balance between dividend growth, yield, appreciation potential, and value. In this piece, we’ll look into one of the more underrated names that might still be worth picking up, even in a market that’s starting to skew a tad more to the fairly valued side.
Of course, as value hunters, we all want to score a big discount, preferably after a market-wide correction. But just because the TSX Index is close to its highs doesn’t mean we should wait around, especially since there’s arguably still long-term value to be had in a fairly valued premium dividend payer that can keep paying bigger dividends over time.
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Bank of Montreal
So, what stands out as a compelling option to pick up today? I think Bank of Montreal (TSX: BMO) has a lot going for it, as shares look to keep marching higher while rewarding investors with nice dividend hikes. Of course, the dividend yield, currently at 3.19%, is close to the lowest it’s been in years.
Thank the 48% gain in the past year for the yield compression. Despite the smaller yield, though, I wouldn’t expect any sort of reversion to the mean to happen anytime soon, especially as the big Canadian banks look to profit from the rise of various technologies, which, of course, includes the likes of generative and agentic AI.
What’s more, though, is that Bank of Montreal appears to be looking into quantum computing, with the bank recently launching an institute aiming to “expand” research capabilities. Of course, it might be a bit too soon for quantum computing to yield big profits in the banking space. But I think that the news signifies that Bank of Montreal is pretty much a fintech-savvy bank at this point, with plenty of room to jolt growth and power margins, perhaps for many years to come.
A fair price to pay for a tech-forward dividend grower
Of course, it’s hard to know what to make of the news. After all, many big banks are starting to spend big money on nascent technologies. In my view, it’s far better to be early to the game than run the risk of showing up late, especially when you consider the stakes when it comes to emerging new technologies and the world of growth they could unlock. Not to mention that forward-thinking systems are going to be absolutely necessary to defend against a new wave of dangerous cyberthreats.
At the end of the day, BMO stock looks like a mildly expensive dividend grower at 17.46 times trailing price to earnings (P/E). However, I think that the AI investments should not go unnoticed, especially if the second half of 2026 sees non-tech firms monetize the technology in real, meaningful ways. Of all the banks, I think BMO’s tech talents are among the most underrated.
