Expect more dividends despite rate hike

Article Excerpt

The Bank of Canada recently raised its benchmark lending rate by 1.0% to 2.5%. More hikes are likely as Canada’s inflation rate recently topped 8%. Higher interest rates will slow demand for new mortgages and other loans. However, loan writeoffs at these two leading banks should remain manageable. They will also earn more interest income on existing loans. Those factors should let them keep raising their dividends. BANK OF MONTREAL $127 is a buy. The bank (Toronto symbol BMO; Income-Growth Dividend Payer Portfolio, Finance sector; Shares outstanding: 671.6 million; Market cap: $85.3 billion; Dividend yield: 4.4%; Dividend Sustainability Rating: Highest; www.bmo.com) will raise your quarterly dividend with the August 2022 payment. Investors now receive $1.39 a share, up 5.0% from $1.33. The new annual rate of $5.56 yields a high 4.4%. In December 2021, Bank of Montreal agreed to buy California-based Bank of the West from France’s BNP Paribas for $16.3 billion U.S. Bank of the West has 514 branches in 24 states across the Midwest…

You are trying to access subscriber-only content.

To read this article, you may subscribe or sign in.
If you are already a subscriber, log in here.

If you wish to become a subscriber, click here. Or you may enjoy access to all our publications when you become a Member of Pat McKeough's Inner Circle Pro.