The Safest Canadian Dividend Stock
- May 18, 2010
- Dividend Investing, Dividend Stocks, High Yield Dividend Stocks, Top Dividend Stocks
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Worries over the economic situation in Europe have produced wild swings in the markets lately. Investors are concerned that the fiscal crisis in Greece will soon spread to other European countries (with Portugal, Spain and Italy being the prime suspects). If that were to happen, the economic ripples would be felt very severely here in the U.S.
Asia doesn’t appear to offer a very good investing alternative either. Financial prognosticators are predicting that China could soon see a severe decline.
Mad Money host Jim Cramer recently commented that Canada appears to be the safest market in the world to invest right now. “There is no rioting in Ottawa, you are not constantly hearing about the weakness of the loonie or Canadian bond woes, because Canada is the world’s most stable financial system,” remarked Mr. Cramer.
Dividend investors looking for a safe haven with attractive yields should also be looking to Canada.
One of our favorite Canadian dividend plays is the Bank of Montreal (BMO: 58.84 -0.02%), which we view as the safest Canadian dividend stock. Canada’s fourth largest bank has seen its stock price climb 10% since the beginning of the year. More importantly for dividend investors, this financial stock offers a 4.7% yield.
BMO maintained their dividend payment through the most recent economic crisis and has a history of returning cash to their shareholders. The company’s stated policy is to maintain a dividend payout ratio of 45% to 55%. Wall Street is forecasting BMO’s earnings to rise 12% in fiscal 2010 with earnings growth accelerating to 17% in 2011. With such strong earnings growth forecasted, we would expect the dividend payment to increase as well.
