Bank of Montreal
Dividend Yield: 4.23%
Head north of the border and you’ll come across Bank of Montreal (BMO), our final safe income pick. If you were impressed by Chevron’s century of dividend payments, consider this: BMO has been rewarding loyal shareholders since 1829. For perspective, remember that the U.S. was just over 50 years old at that time.
Bank of Montreal also hasn’t been shy about ramping up its payments. Over the past decade, BMO’s dividend has soared 120%, including increases in 2012 and 2013.
Last year’s bump put BMO’s annual payout at $2.82 per share — a reasonable 50%, give or take, of the company’s earnings and free cash flow.
And factoring in the most recent increase — which bumped the quarterly payout to 74 cents per share, good for a yield north of 4% — the dividend looks just as sustainable. Based on expected adjusted earnings, Bank of Montreal will be using only 48% of its earnings to reward shareholders this year, and 46% of its earnings next year.
And that’s only if it doesn’t toss shareholders yet another dividend boost. And such a boost seems likely considering BMO is slated for double-digit earnings growth over the next half-decade — higher than the industry average.
As of this writing, Alyssa Oursler did not hold a position in any of the aforementioned securities.