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. Based on this payment, the dividend yield for the company will be 4.2%, which is fairly typical for the industry.

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

Solid dividend yields are great, but they only really help us if the payment is sustainable.

Bank of Montreal has a long history of paying out dividends, with its current track record at a minimum of 10 years. Based on Bank of Montreal's last earnings report, the payout ratio is at a decent 58%, meaning that the company is able to pay out its dividend with a bit of room to spare.

Over the next 3 years, EPS is forecast to expand by 31.1%. The future payout ratio could be 51% over that time period, according to analyst estimates, which is a good look for the future of the dividend.

See our latest analysis for Bank of Montreal

Bank of Montreal Has A Solid Track Record

The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. Since 2015, the annual payment back then was CA$3.12, compared to the most recent full-year payment of CA$6.52. This means that it has been growing its distributions at 7.6% per annum over that time. The growth of the dividend has been pretty reliable, so we think this can offer investors some nice additional income in their portfolio.

We Could See Bank of Montreal's Dividend Growing

The company's investors will be pleased to have been receiving dividend income for some time. We are encouraged to see that Bank of Montreal has grown earnings per share at 7.7% per year over the past five years. Since earnings per share is growing at an acceptable rate, and the payout policy is balanced, we think the company is positioning itself well to grow earnings and dividends in the future.

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. Distributions are quite easily covered by earnings, which are also being converted to cash flows. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. However, there are other things to consider for investors when analysing stock performance. 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. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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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.