The document summarizes dividend increases announced by several Canadian and U.S. companies in March 2013. The increases ranged from 2.8% for Bank of Montreal to 23.8% for Tim Horton's. It also provides a brief profile of Bank of Montreal, noting its size, operations, earnings growth, and dividend yield.

1. march 2013
Dividend Increases
Bank of Montreal 2.8%
Canadian National Railway Co. 14.7%
Canadian Real Estate
Investment Trust 4.0%
cardinal
Cenovus Energy Inc. 10.0%
Deere and Co. 10.9%
Magna International Inc. 16.4%
Royal Bank of Canada 5.0%
Shoppers Drug Mart 7.5%
Tim Horton’s 23.8%
update
Toronto-Dominion Bank 5.2%
Wells Fargo 13.6%
(During the period: February 1 – 28, 2012)
Finding Innovators in the Food Business COMPANY FOCUS
We attended the Consumer Analyst Group of New York conference in February. The
conference is a highlight of the year for the consumer packaged goods sector and an
Bank of Montreal
opportunity to hear companies’ outlook for the next year. What stood out for us is that BMO is the 4th largest bank in Canada and 8th
companies are again focusing on innovation. Commodity cost inflation is less of a concern, largest bank in North America as measured by
which bodes well for profit margins. Consumers are still cautious, but more willing to trade total assets of $542 billion. The bank has diverse
up to a better or new product. operations, including North American banking
(with over 930 Canadian and 630 U.S. Midwest
Innovation might not seem that relevant for a food company. But new products are the life
branches), wealth management, insurance, and
blood of the food industry. Food companies innovate to keep products relevant and boost
capital markets. BMO’s earnings per share have
profits with new, higher margin products. While products typically evolve over time, we also
grown 16% over the previous 12 months and 59%
see new platforms emerge such as the popular K-cups single serve coffee or Greek yogurt.
over the previous 3 years. As a result of strong
Tastes have evolved over the decades alongside North American demographics. In the U.S., earnings growth, BMO increased its dividend
Hispanics now make up 17% of the population and are expected to be 30% by 20501. Asian twice for a total of 6% over the previous year.
influences are also prominent. In response, companies are launching products that appeal Earnings over the last twelve months have totaled
to a more diverse population and focusing on key brands that transcend borders. Kellogg $3.9 billion, with the bank returning $1.8 billion
showcased its Special K brand, which has a strong presence in the Americas, Europe and of that to shareholders in the form of dividends.
Asia. The Special K line has gone beyond just cereal to include snack bars, biscuits, crackers,
BMO continues to integrate its $4.1 billion
breakfast shakes and breakfast sandwiches.
M&I Bank acquisition which has exceeded initial
The U.S. food companies that Cardinal invests in – General Mills and Kellogg – have expectations. With an entrenched presence in
well-known global brands. At the conference, we were impressed by the breadth and the U.S. Midwest, BMO is well positioned to take
potential of new products that both companies are launching over the next year. When advantage of a recovering U.S. economy in the
considering U.S. food companies to invest in, we see innovation and leading brands as key coming years. BMO has provided a total return of
attributes along with strong financials, reasonable valuation and growing dividends. 176% over the last 4 years and gives shareholders
a 4.6% dividend yield.
February Trade: IGM
IGM Financial (“IGM”) was sold from client portfolios in February given our concerns
around IGM’s higher fee structure for mutual funds and increasing competition within the
industry, most notably from the banks. Additionally, we continue to benefit from a positive
Unless otherwise noted, the source of all data in this Update is Bloomberg and Cardinal research. This
equity market experience through our bank and life insurance holdings, both of which are Update is prepared for general informational purposes only. Statements about future performance may not
be realized and past performance is not a guarantee of future performance. Cardinal does not guarantee
better strategically positioned on distribution and offer more diverse operations. the accuracy or completeness of the information contained herein, nor does Cardinal assume any liability
for any loss that may result from the reliance by any person upon any such information or opinions. The
information and opinions contained herein are subject to change without notice.
© 2013, Cardinal Capital Management, Inc. ALL RIGHTS RESERVED. NO USE, TRANSMISSION OR
Source: U.S. Census Bureau
1
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