Bank of Montreal Common Stock Dividend Growth over time

In this section I present information to help you decide if buying the common instead of the preferred is a better choice. There are times in the market cycle when the yield offered by the common is greater than that of the preferred. In addition the dividend of the common is usually increased on a yearly basis while for the majority of the preferreds it remains fixed for life or the 5 year period. Of course other factors should also be taken into account when making the final decision.

Bank of Montreal common shares are currenlty yielding 4.3800% and have a Compound Annual Growth Rate of 5.9288% based on historical data starting with year 2004 to the latest year 2020. Current quarterly dividend is $1.059 and it has been consistently increasing over the last 17 years.

Case A. Based on the 17 year Compound Annual Growth Rate of the Bank of Montreal dividend I calculate the future dividend for the next 5 years to be $1.122, $1.189, $1.259, $1.334, $1.413. Assuming the Stock price remains the same $96.78 over the next 5 years, the corresponding yields will be 4.64081%, 4.91595%, 5.20741%, 5.51615%, 5.84319%. The average yield over the next 5 years is expected to be 5.22471% . Use this yield when comparing to the corresponding preferred yield.

Case B. Based on the last 10 year Compound Annual Growth Rate of 4.2851% for the Bank of Montreal dividend I calculate the future dividend for the next 5 years to be $1.105, $1.152, $1.202, $1.253, $1.307. Assuming the Stock price remains the same $96.78 over the next 5 years, the corresponding yields will be 4.56880%, 4.76458%, 4.96874%, 5.18166%, 5.40370%. The average yield over the next 5 years is expected to be 4.97750% . Use this yield when comparing to the corresponding preferred yield.

Case C. Based on the last 5 year Compound Annual Growth Rate of 4.2124% for the Bank of Montreal dividend I calculate the future dividend for the next 5 years to be $1.104, $1.151, $1.199, $1.250, $1.302. Assuming the Stock price remains the same $96.78 over the next 5 years, the corresponding yields will be 4.56561%, 4.75794%, 4.95836%, 5.16723%, 5.38489%. The average yield over the next 5 years is expected to be 4.96681% . Use this yield when comparing to the corresponding preferred yield.

You now have an additional metric. Compare the projected common share yields to the current and projected yields of the preferreds to see if a preferred or common is better for you.

The graph below shows the dividend growth of Bank of Montreal common stock over time. Place the mouse cursor over the graph to reveal data (date, quarterly dividend amount).

BMO Common Stock Short Position over time

The graph below shows the short position for BMO common share over time. Place the mouse cursor over the graph to reveal data like (date, short position detail).

Currently the outstanding float for BMO is 646,533,257 and the latest short position is 14,611,000. Thus the current short position is 2.2600% of the outstanding float.