BMO Has Paid Dividends for 27 Years but Rising Leverage Deserves Attention

"BMO's earnings payout ratio stands at 77%, calculated from annual dividends of $6.44 against trailing twelve-month earnings per share of $8.36. This leaves room for dividend maintenance even if earnings dip modestly. For fiscal 2025, the bank paid $5.03 billion in dividends against $8.51 billion in free cash flow, producing a 59% free cash flow payout ratio. That's healthy territory, providing a meaningful cushion."

"BMO's balance sheet shows $88.1 billion in shareholder equity against $1.48 trillion in total assets as of fiscal year-end 2025. The debt-to-equity ratio sits at 4.71x, up from 4.43x the prior year. That's elevated but typical for large banks. The capital position remains solid with a CET1 ratio of 13.3%, down slightly from 13.5% last quarter but still well-capitalized by regulatory standards."

BMO increased its quarterly dividend to $1.67 CAD for Q1 2026, a 5% year-over-year rise, producing a 4.61% current yield and continuing 27 years of uninterrupted increases. Earnings payout ratio stands at 77% based on $6.44 annual dividends and $8.36 EPS, while free cash flow payout ratio is 59% with $5.03 billion paid in dividends against $8.51 billion free cash flow. Operating cash flow totaled $10.24 billion, more than twice the dividend outlay. Shareholder equity reached $88.1 billion versus $1.48 trillion in assets, debt-to-equity rose to 4.71x, CET1 ratio was 13.3%, and ROE was 10.1%.

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