Oil rebound cuts BMO’s risk

Article Excerpt

BANK OF MONTREAL $76 is a buy. The bank (Toronto symbol BMO; Conservative Growth and Income Portfolios, Finance sector; Shares o/s: 639.6 million; Market cap: $48.6 billion; Price-to-sales ratio: 2.1; Dividend yield: 5.7%; TSINetwork Rating: Above Average; www.bmo.com) had about $75.2 billion in loans (about 15% of its total loans) to businesses with significant exposure to COVID-19 risk as of April 30, 2020. Those include oil and gas producers. However, oil prices have started to improve in response to recent production cuts. Moreover, demand should continue to rebound as more countries re-start their economies. Those factors cut the risk of major writedowns. That should let the bank keep paying quarterly dividends of $1.06 a share; the annual rate of $4.28 yields 5.9%. Bank of Montreal is a buy. buy…

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