BMO dividend 10.41%

[danmand]

Looks like another slide for the banks. BMO is under $27 and
pays regular dividend of 10.41%.

 

[Malibook]

I've been thinking about picking up some shares but I just can't seem to pull the trigger.
Looks like a falling knife now.

 

[danmand]

I've been thinking about picking up some shares but I just can't seem to pull the trigger.
Looks like a falling knife now.

My hands are in shreds.

 

[squash500]

Looks like another slide for the banks. BMO is under $27 and
pays regular dividend of 10.41%.

BMO could cut its dividend just like Bank of America did.


I know it would be unprecedented for a canadian bank to cut its dividend but now that the bmo yield has reached 10% IMHO all bets are off?

 

[Rockslinger]

At these prices, one of two things will happen. The banks are all insolvent and their stock prices will fall to zero. Or, the banks are seriously undervalued and anybody with the guts and money to buy them now can afford a harem (maybe two) in 2012.

 

[Worldtraveller6]

BMO Technical Analysis

It is below it's 50 day moving average. This points to going lower. For the sake of a few pennies I would wait. A 10% or 9.5% yield on BMO will be great 20 years from now. Patience is the key.

 

[Rockslinger]

BMO could cut its dividend just like Bank of America did.

BMO could never be as dumb as BofA who went out and bought Counttywide and Merrill. Buying Merrill is like inviting Attila the Hun into your house (sorry, didn't mean to insult all the Huns).

Query: What is keeping JP Morgan Chase up? Why haven't they crashed and burned like everybody else?

 

[Malibook]

BMO raised over $1 billion at the end of 2008 with new stock at $30.
How can they justify maintaining such a high dividend when they need to raise cash and dilute shareholders?
A Canadian bank dividend cut could be quite a shock to the markets.

 

[squash500]

BMO raised over $1 billion at the end of 2008 with new stock at $30.
How can they justify maintaining such a high dividend when they need to raise cash and dilute shareholders?
A Canadian bank dividend cut could be quite a shock to the markets.

Maybe the market is already pricing in a potential dividend cut to the BMO shares?

Why else would the dividend yield be so high?

 

[JohnLarue]

At these prices, one of two things will happen. The banks are all insolvent and their stock prices will fall to zero. Or, the banks are seriously undervalued and anybody with the guts and money to buy them now can afford a harem (maybe two) in 2012.

A company will formulate its dividend policy based upon the amount of free cash flow it has available and in the case of banks the capital required to meet regulations.

The stock price will not be a factor in managements decision to maintain or change its current dividend policy

If the volume of loan impairments increases dramatically (which it might), write offs will increase and decrease the capital. Thats when the management may consider cutting the dividend.
They will slash expenses to the bone (layoffs) long before cutting the dividend

A lower price and higher yield is an indication of the markets perception of the possibility of a dividend cut.

 

[DshRipRock]

Isn't Feb 28 the day banks post their earnings/losses. Looks like it's not going to be pretty. I think Bank Stocks have seen their day.

 

[Rockslinger]

I think Bank Stocks have seen their day.

Maybe all stocks have seen their day. S&P is at an 11 year low. However, I think that when this madness is over (in 10-15 years), there will still be a banking industry and the Big 5 will still be standing.

 

[fuji]

Maybe the market is already pricing in a potential dividend cut to the BMO shares?

Why else would the dividend yield be so high?

Exactly. The market is betting on a dividend cut. The market might be wrong though--if it is, quite a tasty dividend. If the market is right on the other hand expect to see that dividend slashed to 2-3% or so.

In the long run they can't keep paying that dividend if they don't have the profits to pay it from.

 

[Rockslinger]

expect to see that dividend slashed to 2-3% or so.

I'm ok with 2-3% if there are no further downside to the stock price and prospect for future dividend growth.

 

[danmand]

Exactly. The market is betting on a dividend cut. The market might be wrong though--if it is, quite a tasty dividend. If the market is right on the other hand expect to see that dividend slashed to 2-3% or so.

In the long run they can't keep paying that dividend if they don't have the profits to pay it from.

Although the market is pricing in a diviodend cut for BMO, I think it is more likely the cut
will be 2-3% to get BMO's dividend in line with the other canadian banks,
than your prediction of a dividend of 2-3%.

 

[Rockslinger]

the cut will be 2-3% to get BMO's dividend in line with the other canadian banks,than your prediction of a dividend of 2-3%.

Does this mean the dividend yield will be in the 7-8% range? If yes, still pretty rich unless the stock price drops which would be counterproductive.

 

[danmand]

Does this mean the dividend yield will be in the 7-8% range? If yes, still pretty rich unless the stock price drops which would be counterproductive.

For your information, today the other banks dividend rates are:
TD 7.03%
CM 8.27%
RY 7.35%
BNS 7.48%

 

[bing]

There is a bank fund, PIC.A, that only invests in the common shares of 5 Canadian banks. Current yield is close to 24%.

Banks are raising capital and a dividend cut by any of the banks wouldn't come as a surprise.

 

[danmand]

There is a bank fund, PIC.A, that only invests in the common shares of 5 Canadian banks. Current yield is close to 24%.

Banks are raising capital and a dividend cut by any of the banks wouldn't come as a surprise.

How big a dividend cut would you expect?

 

[Malibook]

Although the market is pricing in a diviodend cut for BMO, I think it is more likely the cut
will be 2-3% to get BMO's dividend in line with the other canadian banks,
than your prediction of a dividend of 2-3%.

I'd say the market is pricing in BMO's future business prospects.

Basing the dividend on a volatile stock price at any particular time does not make sense.
The dividend yield could easily be back up 2-3% the next day.