Bank of Montreal (TSE:BMO) Is Paying Out A Larger Dividend Than Last Year

Bank of Montreal (TSE:BMO) has announced that it will be increasing its dividend from last year's comparable payment on the 26th of August to CA$1.63. This makes the dividend yield about the same as the industry average at 4.5%.

Trump has pledged to "unleash" American oil and gas and these 15 US stocks have developments that are poised to benefit.

Bank of Montreal's Payment Expected To Have Solid Earnings Coverage

We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue.

Having distributed dividends for at least 10 years, Bank of Montreal has a long history of paying out a part of its earnings to shareholders. Past distributions do not necessarily guarantee future ones, but Bank of Montreal's payout ratio of 58% is a good sign as this means that earnings decently cover dividends.

Over the next 3 years, EPS is forecast to expand by 31.1%. Analysts forecast the future payout ratio could be 51% over the same time horizon, which is a number we think the company can maintain.

Check out our latest analysis for Bank of Montreal

Bank of Montreal Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2015, the dividend has gone from CA$3.12 total annually to CA$6.52. This implies that the company grew its distributions at a yearly rate of about 7.6% over that duration. The dividend has been growing very nicely for a number of years, and has given its shareholders some nice income in their portfolios.

Bank of Montreal Could Grow Its Dividend

Investors could be attracted to the stock based on the quality of its payment history. Bank of Montreal has impressed us by growing EPS at 7.7% per year over the past five years. Shareholders are getting plenty of the earnings returned to them, which combined with strong growth makes this quite appealing.

We Really Like Bank of Montreal's Dividend

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Earnings growth generally bodes well for the future value of company dividend payments. See if the 12 Bank of Montreal analysts we track are forecasting continued growth with our free report on analyst estimates for the company. Is Bank of Montreal not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.