BMO analyst sees dividend increases for these banks

Daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow

BMO analyst Sohrab Movahedi expects dividend increases for some domestic banks,

“Q2/25 earnings season kicks off May 22, 2025, with TD. Across the ‘Big 5′ (ex BMO) we expect cash operating EPS to be flat year-over-year after three consecutive quarters of double-digit y/y growth. Our estimates contemplate double-digit y/y PTPP [pre-tax, pre-provision] earnings growth, except at TD (AML remediation costs), offset by higher PCLs (performing reserve builds). We expect credit quality and reserve adequacy to be a key focus this quarter amid macroeconomic uncertainty (BMO Economics currently expects a “technical recession” in Canada). Trading revenue is expected to be a bright spot this quarter, supported by higher market volatility. We expect dividend increases at BNS (6 per cent; annual review), RY (4 per cent; semi-annual review), and NA (4 per cent; semi-annual review) this quarter. We maintain our stance of the best offense is a good defense and highlight Outperform rated names RY, TD, and, CM as defensive”.

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RBC Capital Markets head of global energy research Greg Pardy surveyed his sector and provided top picks,

“The new model energy producers have embraced globally fuses financial resilience with shareholder returns and is borne out by the numbers as we take a closer look at 2024. Although net debt across our coverage climbed noticeably last year to about $240 billion, it remains at just 60 per cent of peak levels in 2020. Shareholder returns via dividends and share buybacks of about $186 billion in 2024 were down just 4 per cent year/year though—despite lower free cash flows. Organic investment amongst our coverage held steady at around $211 billion in 2024 as producers pursue select growth projects. This disciplined capital investment should bear fruit in the form of higher mid-cycle cash flow generation down the road. Collectively, what this tells us is that energy producers remain well equipped to afford shareholder return optionality in the coming years … Our emphasis on energy stock selectivity reflects intensified market volatility amid no clear path for US tariff policy at this juncture. Our high conviction picks—all of which are on our Global Energy Best Ideas List—include Shell in Europe, ConocoPhillips and Chord Energy in the United States, and Suncor Energy, Canadian Natural Resources, ARC Resources and PrairieSky Royalty in Canada”.

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Cybersecurity is one of the few areas where aggregate revenue growth is seemingly assured but Morgan Stanley analyst Keith Weiss is forecasting a near-term slowdown,

“On-Quarter Results showed Little Sings of Macro Impact, Will Off-Quarter Prints Start to Feel It? Software, including many infrastructure software names, is in the midst of a fervent rally (up 18 per cent over the last month), as Q1 results and forward outlooks thus far have proven better than feared with many companies citing little to no impact from the uncertain macro and the broader market starting to applaud signs of de-escalation on the policy front. Given the strong and ongoing rally and our industry conversations which point to an incrementally cautious buying environment for Q2 and beyond, we see near-term risk/rewards as less favorable and we lean cautious heading into off-quarter results. Diving into the individual company setups ... We do believe the core business at Snowflake continues to stabilize and secular growth prospects are improving as traction outside of cloud data warehousing builds … we remain bullish on Elastic’s (OW) AI search opportunity and note signs of momentum in the security business … however, given our more cautious checks on bookings, the appointment of a new CFO and the fact that management has to provide initial guidance for the forward year, we do see some risk that the outlook comes in below consensus … MongoDB (OW): We do see risk-reward looking more attractive and see the potential for Atlas to accelerate growth on a reported basis as a potential positive … C3.ai is another company reporting a fiscal Q4 that we believe can report a modest beat but we think initial FY26 guidance could call for a material deceleration in growth … On a more constructive basis, we highlight PagerDuty trading at 3.3x CY26 sales and 17x CY26 FCF as a name where expectations are low (management already signaled a change in the environment on our mid April Bus Tour) and sign of stable demand trends would likely be viewed positively. UiPath (EW): The same low expectations setup (particularly after a FY26 guidance cut last quarter) could be applied to UiPath. However, despite some early enthusiasm for its agent portfolio, checks continue to skew negatively so we lack conviction to be materially long into results”

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Bluesky post of the day:

Diversion: “World’s first personalized CRISPR therapy given to baby with genetic disease” – Nature