Investors look forward to this big U.S. deal

Article Excerpt

Bank of Montreal just announced the biggest acquisition in its 205-year history. While expanding by acquisition makes us wary, this purchase strengthens the banking giant’s U.S. retail operations and should spur its earnings for years to come. That will give the bank more room to reward investors, particularly now that Canada’s banking regulator has lifted the restrictions it imposed on capital distributions in March 2020. They were brought in to cover any big jump in loan losses because of COVID-19. BANK OF MONTREAL $146 is a buy. The bank (Toronto symbol BMO; Conservative Growth and Income Portfolios, Finance sector; Shares outstanding: 648.1 million; Market cap: $94.6 billion; Price-to-sales ratio: 3.3; Dividend yield: 3.6%; TSINetwork Rating: Above Average; www.bmo.com) is Canada’s fourth-largest bank by market cap. It has over 12 million customers, mainly in Canada but also the U.S. Retail banking in Canada supplied 36% of its revenue in the latest fiscal year, followed by U.S. banking (24%), capital markets (24%) and wealth management (16%). Despite the…