The most difficult part of investing in dividend stocks is often getting started. Many new investors spend too much time searching for the perfect stock, the highest yield, or the next big opportunity. That makes the simple idea of dividend investing feel much more complicated than it needs to be.
I’d rather begin with a stock with a simple business model that has been around for decades, generates earnings from multiple parts of the economy, and consistently returns cash to shareholders. And Bank of Montreal (TSX: BMO) fits that description really well today. As one of Canada’s largest banks, BMO’s business stretches across personal banking, commercial banking, wealth management, and capital markets. The bank is also investing in new technology while continuing to grow its dividends.
In this article, let’s look at BMO’s fundamentals to understand what makes it an attractive place to begin collecting dividend income.
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BMO stock
Based on its current market cap of $169 billion, BMO is the third-largest bank in Canada. The fact that it had $1.5 trillion in assets as of July 31 also makes it one of North America’s largest banks. Geographically, the bank provides its services across Canada, the United States, and select global markets.
At the time of writing, BMO stock traded at $242.66 per share as its shares have climbed 36% year-to-date and 33% over the last year. Even after those gains, BMO offers a 2.8% annualized dividend yield and distributes its dividend every quarter.
BMO declared a fourth-quarter dividend of $1.71 per common share, unchanged from the previous quarter but up $0.08 (5%) from a year ago. That equals $6.84 per share annually, making it attractive for long-term income investors.
What supports its dividends
BMO’s ability to consistently generate strong cash flow and deliver earnings growth even in a difficult macroeconomic environment makes it one of the most attractive TSX dividend stocks. In the third quarter of its fiscal year 2026 (ended in July), the bank’s adjusted net income rose 19% year over year (YoY) to about $2.9 billion, while its adjusted earnings per share climbed 22% to $3.96.
The Canadian lender’s revenue for the quarter climbed to roughly $9.9 billion from $9 billion a year earlier. At the same time, its provision for credit losses declined to $722 million from $797 million, largely because of lower provisions in Canadian personal and commercial banking and U.S. banking.
More importantly, most of its business segments performed well in the latest quarter. For example, its Canadian personal and commercial banking delivered a 16% YoY increase in net income, while U.S. banking net income rose 13%. Similarly, BMO’s wealth management division posted 22% growth in adjusted net income, while capital markets was even stronger, with reported net income jumping 46% from a year ago.
Why BMO could keep rewarding shareholders
For investors starting a dividend portfolio today, BMO’s current income looks attractive, but its ability to keep growing its business over time makes it an even stronger choice.
Recently, the bank joined Project Agorá, a global initiative exploring how tokenization could make wholesale cross-border payments faster and more efficient. BMO is also working with five other Canadian banks on a Canadian-dollar tokenized deposit solution to make payments more efficient and programmable while maintaining regulatory safeguards.
Along with that, BMO continues to invest in technology and artificial intelligence (AI) to improve client experiences and automate parts of its business. These initiatives add more potential growth opportunities to an already diversified bank.
Given all these positive factors, BMO offers a simple mix of income, scale, and improving underlying earnings, especially for someone who has not started collecting dividends yet.
