Wednesday, January 9, 2019

Recent Buy – BMO

A quick update on a a recent purchase in my portfolio.
After some continued weakness overall in the markets and the financial sector, I added 20 shares of Bank of Montreal (BMO.TO) @ CAD$92.76. The current yield is approx 4.3% and will add CAD$80.00 to my forward dividend income.

Bank of Montreal really needs no introduction, as Canada’s oldest dividend payer since 1829. I have owned BMO as part of Baby R2R‘s Nest Egg portfolio, and decided that I should own some shares for myself too.
The current valuation looks attractive with trailing PE 11.2, Forward PE of 9, and pretty good overall numbers all round. Following screenshot from Morningstar provides a quick overview of the company’s valuation.
BMO provides a good exposure to the Canadian market, but also is least exposed to the housing mortgage market, which is a big risk factor in the Canadian economy. BMO has also been expanding its business internationally – both in US and overseas in Asia over the years.
The investment comes with plenty of risk factors of course. I have been unsure about this move since I might be catching a falling knife here. The world markets are tumbling over after the bull run for 10 years, and financials will be hit hard as the worldwide liquidity dries up. Nevertheless, I consider this a long term hold and will add more if the stock keeps falling.

Full Disclosure: Long BMO.TO. Our full list of holdings is available here.

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