Canada’s big banks are often recognized as being some of the best long-term investments on the market. There’s more than a few reasons for that, ranging from the stable and well-regulated business environment they operate in to their growth focus outside of Canada. One major reason for that view is the dividends that they offer.
Among the big banks, Bank of Montreal (TSX: BMO) stands out for the dividends it pays. And for those investors who may have already missed out on a year of dividends from BMO, it can be frustrating, but it’s also not too late.
Source: Getty Images
It is easy to miss a year of dividends
It’s not uncommon to look at returns in terms of stock price. When a stock rises, it feels like the opportunity has passed.
BMO, for example, has recorded gains of over 30% this year as of the time of writing.
While that can be painful to watch from the sidelines, for dividend investors, however, there’s another cost. That comes in the form of the income that could have been collected and, more importantly, reinvested over the past year.
That’s where BMO’s appeal really shines for investors who are seeking long-term dividends. BMO has paid dividends longer than any other company in Canada. That number currently sits just shy of two centuries.
Given that track record and the incredible growth we’ve seen over the past year, sitting on the sidelines only becomes more expensive with each passing year.
Why BMO stock still deserves attention
As of the time of writing, BMO offers a dividend yield of 2.84%. That may not sound like enough to create a stellar income stream overnight, but it’s not supposed to.
The appeal of BMO stems from its stability as one of the big bank stocks. It also has diversified operations, including personal and commercial banking, wealth management, capital markets, and U.S. banking.
The U.S. presence in particular warrants a mention. Following a series of well-executed acquisitions over the years, BMO has stitched together a branch network that extends across 32 state markets in the United States. This exposes the bank to millions of additional customers and billions in deposits and loans. It also elevates the bank into position as one of the larger banks in the U.S.
More importantly, that scale gives the bank multiple ways to earn money across different market conditions.
In terms of results, in the most recent quarter, BMO reported adjusted earnings of $3.96 per share. Revenue rose 10% year over year to $9.9 billion. That shows growth persisted despite broader caution in the economy.
That’s not to say the bank is without risk. Periods of slower loan growth and higher credit losses can come with changes in the overall economy. But given the bank’s two-century history, BMO has already navigated and emerged stronger from those challenges.
Do not let another year pass by
No stock is without risk, and that includes the otherwise defensive appeal offered by BMO. That being said, what BMO does offer is a massive domestic network, a growing international presence, and wealth management and capital markets segments.
Add on that solid dividend with nearly two centuries of payments, and you have one of the best long-term options for income investors on the market.
Just don’t let another year pass by before investing in and beginning to collect those dividends.
