BANK OF MONTREAL $70 - Toronto symbol BMO

BANK OF MONTREAL $70 (Toronto symbol BMO; Conservative Growth and Income Portfolios, Finance sector; Shares outstanding: 644.5 million; Market cap: $45.1 billion; Price-to-sales ratio: 2.2; Dividend yield: 4.2%; TSINetwork Rating: Above Average; www.bmo.com) is Canada’s fourth-largest bank, with $537.3 billion of assets. The bank is buying U.K.-based F&C Asset Management, which sells investment services to individuals and institutional clients, such as pension plans and insurance companies. F&C has $136 billion U.S. in assets under management, which will increase the assets that Bank of Montreal’s Global Asset Management division administers to $269 billion U.S. The purchase will also add many wealth management clients outside North America. Bank of Montreal will pay $1.3 billion for F&C, assuming it does not attract a better offer (F&C’s shares trade on the London Stock Exchange). The bank aims to close the deal by May 1, 2014. To put this purchase in context, Bank of Montreal earned $4.3 billion, or $6.30 a share, in fiscal 2013. That’s up 4.8% from $4.0 billion, or $6.00 a share, in 2012. Low interest rates are cutting the income the bank receives from its loans. However, it set aside $589 million to cover potential bad loans in fiscal 2013, down 23.0% from $765 million in 2012. That was the main reason for the higher earnings. Revenue rose just 0.8%, to $16.3 billion from $16.1 billion. Revenue from Canadian retail banking (39% of the total) gained 2.1%, as low interest rates continued to spur mortgage and business loan demand. However, U.S. banking revenue (18%) fell 2.9% due to lower interest income, which offset stronger loan demand from businesses. Wealth management revenue (22%) jumped 18.9%, because improving stock markets raised the value of the assets this business manages. Higher trading volumes also pushed up revenue at the bank’s trading division (21%) by 4.6%. Bank of Montreal continues to cut costs, which will help lift its fiscal 2014 earnings to $6.35 a share. The stock trades at 11.0 times that forecast. As well, the bank recently raised its quarterly dividend by 2.7%, to $0.76 a share from $0.74. The new annual rate of $3.04 yields 4.2%. Bank of Montreal is a buy.

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Blue Chip Stocks

Blue chip stocks are big, well-established, dividend-paying corporations with strong business prospects. These are companies that also have sound management that should be able to make the right moves to keep competing successfully in a changing marketplace.

Dividend Stocks

Dividend stocks make cash payouts that serve as a way for companies to share the wealth they’ve accumulated. These payouts are drawn from earnings and cash flow and paid to the shareholders of the company. Typically, these dividends are paid quarterly, although they may be paid annually or even monthly as well.

Value Stocks

What are value stocks?

One of the sweetest and most profitable pleasures of successful investing is to buy high-quality “value stocks” (or stocks that are reasonably priced, if not cheap, in relation to its sales, earnings or assets), then hold on to them as mainstream investors recognize the value and push up the share price.

Growth Stocks

Growth stocks are companies that are likely to have sales and earnings growth well above market average. Frequently they pay few, if any, dividends. Instead they typically reinvest any extra cash flow to promote further growth. Chosen wisely—according to Pat McKeough’s advice—high-quality growth-oriented stocks can be worthwhile additions to most well-diversified portfolios.

ETFs

What are ETFs?

ETF is an acronym for exchange traded fund.. These exchange traded funds are used to track indexes as closely as possible, since investors cannot actually buy an index outright.

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Pat McKeough has been making investing for beginners simple—and profitable—by helping investors make big gains for more than 25 years. His advice to beginning investors is the same as it is for all investors: buy high-quality, mostly dividend paying stocks (or ETFs that hold these stocks) and evenly spread your investments over the five main economic sectors (Resources, Manufacturing, Finance, Utilities and Consumer). Pat also believes investors should avoid stocks in the broker/media limelight and focus on those with hidden or little-noticed assets.

Wealth Management

Wealth management is the practice of putting your savings to work so that it continues to grow over your lifetime and will also benefit your heirs. Wealth management encompasses many different areas of investing like long term investment planning and retirement planning.

AI Investing

Artificial intelligence (AI) is essentially the merging of today’s big computing with big data. This has resulted in breakthroughs in everything from creating machines to recognize faces with more accuracy than a human, to the development of chatbots able to collect, organize and simplify all the Internet has to say on any topic.

Spinoffs

One of the ways a company can try to unlock its own hidden value is by creating a separate company out of a corporate subsidiary. The parent company can either sell stock in the new company to the public, or spin it off—hand the stock out to its own investors.

Penny Stocks

A penny stock in general trades for under five dollars a share, and as the name implies, sometimes for pennies. Most of the time they’re young companies, or start-ups in speculative markets like mining or technology.

Mining Stocks

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Energy Stocks

What are energy stocks?

Businesses that work in the extraction, refining and delivery of energy sources such as natural gas, oil, uranium and coal, are considered energy stocks.