Monday, March 19, 2018

Recent Buy, March 2018

Bracketed Gremlin here to discuss a recent stock buy.  Did anyone here finally call the 16 seed blowing out a 1 seed in the NCAA Tournament?  I didn't, but I did find the whole thing amusing.  In sports, if I have no horse in the race, I universally root for the underdog.  Its just more fun seeing someone win when they were not supposed to do that.  Anyways, if I cannot win Buffett's million, I might as well just buy some quality dividend paying stocks.  So that is what I did, picked up some more shares to further pump my dividend income.

Today, I added a new position by purchasing shares of the Bank of Montreal (BMO) in my taxable account.  I bought 15 shares, with a total cost of $1,135.94 ($75.27 / share, plus commission).  The current yield is 3.90%.  The P/E ratio for BMO sits today at approximately 13.77, trailing.  The yield is slightly above the 5 year average of 3.88%, and P/E is slightly above the average of the past 5 years (11.75).  BMO has a trailing payout ratio of approximately 51%.  BMO is a member of the Canadian Dividend All-Star list, with 6 years of growth.  They, along with the other major Canadian banks froze payouts during the 2008 Financial Crisis, only to resume them with two years.  BMO has been paying dividends since 1829, and has never once missed a payment.

BMO is my third Canadian Bank stock, after Canadian Imperial Bank of Commerce (CM) and Bank of Nova Scotia (BNS).  The Canadian banking sector is very solid, even with all the press surrounding the very real housing bubbles in Toronto and Vancouver.  BMO has the least exposure to those markets of all of the Canadian majors, and it has a strong presence in the USA with Harris Bank.  It may not be as conservative as Toronto-Dominion Bank, but it still has an impeccable and set of credentials.

This purchase will add approximately $36 to my forward 12 month dividend income.

I will update my portfolio page at the end of the month.

What do you think of BMO? 

- Gremlin
- Long BMO, CM, and BNS

4 comments:

  1. Didn't call the upset also had Michigan. Just a heads up, you can avoid the Canadian tax being withheld when it's in your IRA.

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    1. Charlie,

      Thanks for the comment. I did have Michigan go fairly deep myself. I know I can avoid the Canadian tax in an IRA (as long as your brokerage knows better, which it seems some don't), but my goal is to build passive income that I can use before a predetermined (old-man) date. Even with the tax, which can be claimed to offset some taxes in the US, the yield + growth make BMO worthwhile to me.

      - Gremlin

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  2. BMO has been on my watch list for a long time. I like the Canadian banks and hold TD, BNS and RY in my ROTH account. BMO and CM are my other two picks to, one day, round out my Canadian banking "all stars." Nice pick up.

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    1. Keith,

      Thanks for the comment. I agree, I want to simply own them all!

      - Gremlin

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