The Bank of Nova Scotia (USA) (BNS), Bank of Montreal (USA) (BMO): It’s Hard to Go Wrong With Canadian Banks

BMO gives back to shareholders

Those focusing on yields should turn to Bank of Montreal (USA) (NYSE:BMO). The firm offers a yield of just under 4.7%. In fact, the bank pays its shareholders around 45% of earnings. The dividend has grown 9% in the last decade. The net interest income after loan loss provision was over $8 billion last year, and while it is lower than the two aforementioned banks, it is an increase of about 100% from 2009 when the number was just under $4 billion.

The company isn’t exposed outside of North America, as it currently splits operations between the United States (30%) and Canada (70%). However, the company is expanding its U.S. operations fast, and in 2011, it doubled its American exposure with the purchase of Marshall & Ilsly. The company is a safer purchase for those not bullish on the profitability of developing nations. Also, with hard feelings permeating in the American banking sector, a firm boasting the name of a Canadian city (and an air of stability) could catch on quickly. This will likely allow the bank to gain market share in the United States.

Which bank to go with…take your pick

RBC stands out as a Canadian bank for the safe investor. The firm is large enough to withstand disappointing starts in Asian countries, but as it strengthens its hold there, operations will become more efficient. The Bank of Nova Scotia (USA) (NYSE:BNS) and Bank of Montreal (USA) (NYSE:BMO) have shown considerable growth since the recession, and with the banking sector in Canada considered one of the strongest in the world, it’s difficult to not win with any of these highly regulated, safe investments with huge potential upside.

The article It’s Hard to Go Wrong With Canadian Banks originally appeared on Fool.com and is written by Phillip Woolgar.

Phillip Woolgar has no position in any stocks mentioned. The Motley Fool recommends The Bank of Nova Scotia (USA). Phillip is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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