Wednesday, December 23, 2009

Bank of Montreal

The next bank I want to deal with is the Bank of Montreal (TSX-BMO). I invested in this bank in 1983. I have only tracked it on quicken since December 1987 and since then I have made a return of 16% per year. This has not done as well for me as the Royal Bank has. My dividend yield on my original investment is just over 19% per year. This is after some 27 years and for the Royal Bank, I am making a 27.6% return after 15 years. However, the return on this bank is nothing to sneeze at.

The thing I notice about this bank is that it has not done was well as the other 4 I follow over the last 5 years. The 10 year total return is some 10% per year, but the 5 year total return is only 1.6%. This is not good. The dividends accounted for about 4.5% of the return in both periods. So, over the last 5 years, the stock has done badly. The growth in revenue is also not good. For the 5 and 10 year periods, the revenue growth is just under 4%.

The worse growth figures is in the earnings and over the last 5 years this has gone down at rate of 7% per year. The one place that it has kept up with the other banks is in dividend increases, and here it is the lowest, but not by much. It has increased dividends at 12% per year. However, of the 4 banks I follow, it has a higher payout than any other bank. The others have a payout rate in the 50% range and this bank’s payout is in the 60% range.

When I look at the Asset/Liability rate, this stock is also the lowest at 1.04. It also has the lowest Return on Equity for the last 5 years. The average 5 year rate is just over 13%. The ROE at the 2009 reporting date was just 8.8%. However, this was better than TD Bank, whose ROE at the 2009 reporting date was 7.6%. The best I can say about this bank is at least the Accrual Ratio was negative at -.2%.

I will not be posting tomorrow because of the holidays. I will post again on Monday, December 28, 2009. I will finish up on this bank and go on to the Bank of Nova Scotia. I will then post the spreadsheet showing all the figures, so you can compare these banks.

BMO is a bank. They offer personal and corporate banking and wealth management services in Canada and US, which includes looking after banking, financing, investing, credit card and insurance needs. They offer mortgages and mutual funds and they offer full service and on-line brokerage services. They are international bank having banking in Canada and US. They have clients, corporate, institutional and governmental, in UK, Europe, Asia and South America. Its web site is See my spreadsheet at

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website at for a list of the stocks for which I have put up spreadsheets. Also, look at other investing notes on my website at

No comments:

Post a Comment