Canadian Banks start reporting Year End results:

The Bank of Montreal (BMO) is expected to report quarterly and year end results today. The expectation is that the BMO will come in with $1.25 per share for the quarter slightly below the $1.30 in the third quarter. BMO is expected to increase the dividend by approximately 12% to $2.78 per share annually.

The Canadian banks have been one of the more stable sectors in the market and have seen a lot of interest by investors looking for income. The banking sector has a long history of increasing dividend payouts over time and is viewed as stable high income common share investments.

The recent changes by the government regarding taxation of income trusts has increased the attractiveness of bank shares due to the potential for higher income as profits grow. This increased interest has pushed bank shares higher over the past month and in many cases the share price is becoming over valued. Investors should be cautious and not become over exposed to this sector as any disappointment in earnings will have a negative impact on the share price, expectations have become a little too bullish for my liking.

The rest of the banking sector reports over the next two weeks with the Royal and National Banks on November 30th, CIBC December 7th, TD and Bank of Nova Scotia on the 8th.

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