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Bank of Montreal (BMO) does not get much attention the United States even though it is one of Canada's largest banks. That is the shame. Our neighbor to the north managed to avoid the housing implosion that brought down our economy. Banks are required to hold more capital, and the country does not have the same policies to encourage home ownership among those who can marginally afford it.

Its economy has outperformed any other in the G7 throughout the financial crisis. Bank of Montreal, as a result, did not have to go through the near death experience most of our major banks experienced in 2008 & 2009 as a result.

The bank really should get more attention from income investors looking for a good yield play to put in their income generating portfolios.

Company Overview:

Bank of Montreal has over $500B in assets, and provides a broad range of retail banking, wealth management and investment banking products and solutions in Canada. July 2011, BMO announced that it had completed the acquisition of Milwaukee-based Marshall & Ilsley Corporation (MI). MI merged with Harris Bank to form BMO Harris Bank, part of BMO Financial Group. This gave it entry into the banking market in the United States.

Dividend:

BMO yields just over four percent. Bank of Montreal never had to cut its payout through the financial crisis, and has increased its payouts incrementally and consistently over the past few years. In the last decade, the bank has more than doubled its dividend payout.

Earnings Report:

The bank released quarterly results this morning. It reported earnings of $1.61 Canadian a share, 7 cents above consensus. Revenues came in 1.5% above expectations as well. Net income was up 5% over the same period last year. The company also recently received permission to add 15mm shares to its stock repurchase program. The program would retire over 2% of its float at current stock levels.

Valuation & Summary:

Despite the bank's stability and solid dividend yield, the shares are not expensive at under 10.5x this year's projected earnings. This is not an exacting stock put in the context of last year's ~30% rally in equities. However, in what is looking like a much constrained market; BMO's high yield and reasonable valuation are attractive. The stock has sold off some 7% from highs late last year, and is offering an attractive entry point for income investors.

Source: Bank Of Montreal: Attractive High-Yield Canadian Play