Thursday, January 8, 2015

Bank of Montreal

I own this stock of Bank of Montreal (TSX-BMO, NYSE-BMO). When I bought this stock in 1983, I thought it was the best bank stock to buy at that time.

This is a dividend growth stock, but they have not increased the dividends every year. They were flat in the early 1980's and from 2008 to 2013. Because they had a long recent stretch of no dividend increases the 5 year growth is very low at 1.7% per year. The 10 year growth figure is at 6.7% per year.

The last dividend increase was for this year and the increase was for 2.6%. This will be the second dividend increase for the financial year ending in October 2015 and so far dividends for that financial period is up by 4.6%. Since I have had this stock in 1983 my dividends have increased at the rate of 6.2% per year.

Since 1983, I have received some $43.41 per share in dividends. Since I paid $7.28 per share, my dividends have more than covered the original cost. I have only tracked this stock since 1987 in Quicken and in that time I have made 16.05% return per year with 11.69% per year from capital gains and 4.36% per year from dividends.

I bought some of this stock for another account in 2008. In this account I have done better as far as total return goes with a total return of 22.07% per year. Some 16.42% per year of this return was from capital gains and 5.65% per year of this return was from dividends. On the other hand I paid $58.09 per share and have made only $7.69 per share in dividends. My dividends on this stock have only covered some 13% of my original cost.

The dividend payout ratios are good with the 5 year median DPR for EPS at 47% and for CFPS at 37%. The DPR for the last financial year ending October 2014 were at 47% for EPS and 45.6% for CFPS.

The total return for the last 5 and 10 years is rather moderate at 11.23% and 7.46% per year over these periods. The dividend portion of this return is at 4.51% and 4.21% per year. The capital gains portion of this return is at 6.72% and 3.25% per year.

The outstanding shares have increased by 3.2% and 2.6% per year over the past 5 and 10 years. Shares have increased due to Share Issues, DRIP and Stock Options. They have decreased due to Buy Backs. There is nothing wrong with shares increasing or decreasing per se, but if they are increasing you need to look at per share values.

That is as a shareholder the Revenue per Share and Earnings per Share are more important than Revenues and Net Income. So for BMO, the Revenue per Share has increased by 4.2% and 3% per year over the past 5 and 10 years. The Revenue has increased is at 7.6% and 5.7% per year over the past 5 and 10 years.

The EPS has increase by 15.8% and 3.8% per year over the past 5 and 10 years. The big increase in EPS over the past 5 years is due to an EPS low in 2009. Over the past 5 years the EPS has increased by 6.8% per year using 5 year running averages.

The Return on Equity has only been lower than 10% one time in the last 10 years. The ROE for the financial year ending in October 2014 was 12.1% with a 5 year median of 12.6%. The ROE on comprehensive income is 16.7% with a 5 year median of 15%. Some analysts like the comprehensive income better than the net income. It is certainly a positive result.

Sound bite for Twitter and StockTwits is: Bank Dividend Growth Stock. I think that everyone should have some exposure to banks and the financial sector. I made most of my money on financials and utility stocks. I have some 28.9% of my portfolio in financials with 3 Canadian Banks making up some 17.2% of my portfolio. See my spreadsheet at bmo.htm.

This is the first of two parts. The second part will be posted on Friday, January 9, 2015 and will be available here. The first part talks about the stock and the second part talks about the stock price.

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 here BMO.

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. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

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