Contrasting Bank Of Montreal (NYSE:BMO) and Independent Bank (NASDAQ:INDB)

Independent Bank (NASDAQ:INDB) and Bank Of Montreal (NYSE:BMO) are both finance companies, but which is the superior business? We will compare the two businesses based on the strength of their analyst recommendations, institutional ownership, dividends, earnings, profitability, valuation and risk.

Dividends

Independent Bank pays an annual dividend of $2.56 per share and has a dividend yield of 3.3%. Bank Of Montreal pays an annual dividend of $4.81 per share and has a dividend yield of 2.9%. Independent Bank pays out 46.2% of its earnings in the form of a dividend. Bank Of Montreal pays out 54.3% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Independent Bank has raised its dividend for 15 consecutive years and Bank Of Montreal has raised its dividend for 4 consecutive years. Independent Bank is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility & Risk

Independent Bank has a beta of 0.76, meaning that its stock price is 24% less volatile than the S&P 500. Comparatively, Bank Of Montreal has a beta of 0.93, meaning that its stock price is 7% less volatile than the S&P 500.

Earnings & Valuation

This table compares Independent Bank and Bank Of Montreal”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Independent Bank	$1.17 billion	3.14	$205.12 million	$5.54	14.02
Bank Of Montreal	$55.92 billion	2.08	$6.22 billion	$8.86	18.90

Bank Of Montreal has higher revenue and earnings than Independent Bank. Independent Bank is trading at a lower price-to-earnings ratio than Bank Of Montreal, indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

83.4% of Independent Bank shares are held by institutional investors. Comparatively, 45.8% of Bank Of Montreal shares are held by institutional investors. 1.6% of Independent Bank shares are held by insiders. Comparatively, 1.0% of Bank Of Montreal shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Profitability

This table compares Independent Bank and Bank Of Montreal’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Independent Bank	20.31%	9.19%	1.31%
Bank Of Montreal	11.72%	13.60%	0.71%

Analyst Ratings

This is a summary of recent ratings and price targets for Independent Bank and Bank Of Montreal, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Independent Bank	1	1	4	1	2.71
Bank Of Montreal	1	6	5	0	2.33

Independent Bank currently has a consensus target price of $91.86, suggesting a potential upside of 18.30%. Bank Of Montreal has a consensus target price of $163.00, suggesting a potential downside of 2.65%. Given Independent Bank’s stronger consensus rating and higher possible upside, equities research analysts plainly believe Independent Bank is more favorable than Bank Of Montreal.

Summary

Independent Bank beats Bank Of Montreal on 11 of the 18 factors compared between the two stocks.

About Independent Bank

Independent Bank Corp. operates as the bank holding company for Rockland Trust Company that provides commercial banking products and services to individuals and small-to-medium sized businesses in the United States. The company provides interest checking, money market, and savings accounts, as well as demand deposits and time certificates of deposit. It offers commercial real estate and construction, commercial and industrial, small business, secured and unsecured commercial, and consumer real estate loans; term loans and revolving/nonrevolving lines of credit; overdraft protection and letters of credit; and residential mortgages and home equity loans and lines. In addition, the company provides cash management services, such as ACH transaction processing, positive pay, and remote deposit services; investment management and trust services to individuals, institutions, small businesses, and charitable institutions; mobile, online, and telephone banking; estate settlement, financial planning, tax services, and other services; automated teller machines; debit and credit cards; and mutual fund and unit investment trust shares, third party model portfolios, general securities, fixed and variable annuities, and life insurance products, as well as advisory platforms. Further, it invests in low-income housing tax credit projects; holds, maintains, and disposes foreclosed properties; and operates as an investment advisor. Independent Bank Corp. was founded in 1907 and is headquartered in Rockland, Massachusetts.

About Bank Of Montreal

Bank of Montreal provides diversified financial services primarily in North America. It operates through Canadian P&C, U.S P&C, BMO Wealth Management, and BMO Capital Markets segments. The company’s personal banking products and services include deposits, mortgages, home lending, consumer credit, small business lending, credit cards, cash management, financial and investment advice, and other banking services; and commercial banking products and services comprise various of financing options and treasury and payment solutions, as well as risk management products. It also offers investing, banking, and wealth management advisory; digital investing services; financial solutions for individuals, families, and businesses; provides investment management services to institutional, retail, and high net worth investors; and diversified insurance, and wealth and pension de-risking solutions. In addition, the company provides individual life, critical illness and annuity products, as well as segregated funds, and group creditor and travel insurance to customers; debt and equity capital-raising, loan origination and syndication, balance sheet management, treasury management, mergers and acquisitions advice, restructurings and recapitalizations, trade finance, and risk mitigation services, as well as a range of banking and other operating services. Further, the company offers research and access to financial markets for institutional, corporate and retail clients through an integrated suite of sales and trading solutions related to debt, foreign exchange, interest rates, credit, equities, securitization, and commodities; provides new product development and origination services, as well as risk management and advisory services for hedging strategies, including in interest rates, foreign exchange rates and commodities prices; and funding and liquidity management services. The company was founded in 1817 and is headquartered in Montreal, Canada.