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Dividend Strategy Session On Bank Of Montreal

Oct. 05, 2021 8:15 AM ETBank of Montreal (BMO), BMO:CA6 Comments
Stefan Redlich profile picture
Stefan Redlich


  • Dividend investors seeking to optimize income from their investments should look at ex-dividend dates and time their purchases accordingly. The question is, how?
  • Analyzing historical performance for one of Canada's leading banks, the Bank of Montreal, I'll compare total returns around the previous 47 individual ex-dividend dates across three strategies.
  • Is it best to forfeit the next dividend payment and benefit from a lower stock price in the beginning, or should you grab that next dividend payment?
  • I will also show how much more or less in dividends investors can earn when buying the stock post the ex-dividend date.

Erfolgs-Business-Chart mit grünem Pfeil nach oben und US-Dollar Hintergrund. Profit und Geld. Finanz- und Geschäftsdiagramm. Börsenwachstum 3D Abbildung.
JuSun/iStock via Getty Images

Dividend investors seeking to optimize income from their investments can look at ex-dividend dates in order to time their purchases accordingly once they have made the "Buy" decision.

We all know that timing the market

This article was written by

Stefan Redlich profile picture
I am working as a Business Analyst and Data Engineer in Germany and have started to build up a portfolio focused on Dividend Growth, both on the high and low-end yield spectrum. Primary focus is on Blue Chips with long-reaching dividend track records. I have been investing for 2 years and have been standing on the sidelines for way too long before. I love developing spreadsheets in Google and Excel to analyze financial performance and integrate these two sources with each other!Happy to connect on the various channels!

Analyst’s Disclosure: I/we have a beneficial long position in the shares of BNS, TD; RY, CM either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

I am not offering financial advice but only my personal opinion. Investors may take further aspects and their own due diligence into consideration before making a decision.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (6)

Buy_low_sell_high profile picture
noob question. Does this count as a foreign tax for US investors on commercial brokerage side (double tax)?

Is this allowed to be tax free in a roth account even though foreign Canadian company?
What this analysis is lacking, in my opinion, is an explanation of why buying the stock 1 day after ex-day yield superior return. Because of the sample size, the result may not be statistically significant to prove anything. I think the next step is to 1) increase the sample size by analyzing more stocks, like you mentioned in the article, and 2) analyzing BMO’s daily return, taking out the effects of dividends. This way, you can tell if the daily return on ex-div +1 day is significantly lower than other times, which would explain the abnormal return if you buy on ex-div +1. Just my personal opinion, keep up the good work!
Hanno profile picture
@Lance Mu If the study will go in-depth, one has to do this. The study in the article above is a scratching in the surface if the factors do correlate.

Anyway, nice study but yet not applicable for the (un-)known reasons.
@Lance Mu

Doubt this is doable.
RICARDO DI VINCI profile picture
Canadian banks were mandated last year by the government to 1) not increase executive compensation and 2) not increase dividends.
Bets are on that those "hindrances" will drop soon. So bets are that the banks will have a hefty div increase as they have not increased for close to two years now. Which technically puts them off the aristocrat listings except that they had no other option..

Stefan Redlich profile picture
@RICARDO DI VINCI Yeah, I don't pay much attention to that anyway. It is just artificially mandated by government, so no way you can impact that. Once they get back to growth I expected double digit dividend raises from all of them basically given their very strong business right now.
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