Lower costs should drive your returns

Article Excerpt

BANK OF MONTREAL, $100, is a buy. The bank (Toronto symbol BMO; Conservative Growth and Income Portfolios, Finance sector; Shares o/s: 638.4 million; Market cap: $63.8 billion; Price-to-sales ratio: 2.6; Dividend yield: 4.1%; TSINetwork Rating: Above Average; www.bmo.com) continues to expand its online and mobile platforms as fewer of its clients visit physical branches. Thanks to those investments, Bank of Montreal has improved its efficiency ratio (non-interest costs, such as employee salaries, divided by revenue—the lower, the better) from 65.5% in the fiscal year ended October 31, 2015, to 59.9% in the quarter ended July 31, 2019. The bank expects to lower that ratio to 58.0% by the end of fiscal 2021. The stock trades at a low 10.6 times the likely 2019 earnings of $9.43 a share. Your $4.12 annual dividend yields a high 4.1%. 4.1%….