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Canadian bank headquarters stand on Bay Street in Toronto Aug. 29, 2011.Brent Lewin/Bloomberg

It's not often that we can buy shares in major Canadian banks that yield over 4.5 per cent, but that's the situation right now.

Despite unexpectedly good third-quarter numbers, the banking sector remains out of favour with investors, who are worried that the weakness in the economy will eventually manifest itself in reduced profits. As a result, the financial sector is off 8.7 per cent year-to-date (as of the close on Sept. 25), thereby creating a buying opportunity for long-term income investors.

Three of the five major banks now have yields in the 4.5-to-5-per-cent range: CIBC and Scotiabank at 4.8 per cent and BMO Financial Group at 4.7 per cent. Yields for RBC and TD are lower at 4.4 per cent and 4 per cent, respectively.

For yield-starved investors, all the banks look attractive at these levels, especially considering that only a financial disaster would force them to cut their payout. All of the Big Five maintained their dividends during the meltdown of 2008, although there were no increases for a few years.

Right now, I particularly like BMO Financial Group, better known to most people as Bank of Montreal. Here are the details.

The business: BMO is the fourth largest of Canada's Big Five banks with $672-billion in assets as of July 31. Established in 1817, BMO Financial Group has more than 47,000 employees and provides a broad range of retail banking, wealth management, and investment banking products and services to more than 12 million customers. It conducts business through three operating groups: Personal and Commercial Banking, Wealth Management, and BMO Capital Markets. The company also has a strong presence in the U.S. Midwest through BMO Harris Bank and BMO Private Bank.

The security: I recommend the common stock of Bank of Montreal, which trades on both the Toronto and New York stock exchanges.

Why I like it: Despite the naysayers, BMO and the other Canadian banks continue to post good results and the unofficial oligarchy that limits the number of major players in the business ensures the on-going dominance of the Big Five. Royal Bank, TD Bank, and Scotiabank are all larger in size, but BMO has shown strong progress in recent years and has been aggressive in terms of growing its wealth management business and expanding its U.S. footprint.

Financial highlights: The bank reported third-quarter fiscal 2015 earnings (to July 31) of just under $1.2-billion, up 6 per cent year over year. Earnings per share were $1.80, up 8 per cent over last year. Return on equity was 13.6 per cent, down from 14.4 per cent a year ago, while provision for credit losses increased from $130-million to $160-million. The Basil III Common Equity Tier 1 ratio was 10.4 per cent. Book value per share increased 19 per cent from the prior year to $55.36.

For the first nine months of the fiscal year, the bank earned about $3.2-billion. That was down slightly from 2014 although adjusted earnings were up 2 per cent. Adjusted earnings per share for the nine months were $5.10, up 3 per cent.

Net income from Canadian personal and commercial (P&C) banking in the third quarter was $556-million, up 6 per cent from a year ago. That was good but even more significant was a big 38-per-cent jump in the profits from U.S. P&C banking, which came in at $222-million.

Wealth management contributed $210-million, up 11 per cent from last year. The only sector to show a profit decline was BMO Capital Markets, with net income of $273-million, off 11 per cent.

Risks: A severe and prolonged recession would hit the profits of all the banks, including BMO. Bank profits are also vulnerable to a downturn in the housing market that would dry up mortgage demand and increase the potential for defaults. If a new government raises corporate taxes, that would also affect the bottom line.

Distribution policy: BMO pays a quarterly dividend of 82 cents a share in January, April, July, and October, for a total annual payment of $3.28. The last dividend increase was a 2-cent bump in July.

Tax implications: The quarterly payments are eligible for the dividend tax credit if held by Canadians in a non-registered account. U.S. residents will be assessed a 15 per cent withholding tax unless the payments are made to a retirement plan. The withholding tax can be reclaimed by using the foreign tax credit.

Who it's for: This stock is suitable for conservative investors who want to take advantage of the high yields currently available from the Canadian banks.

How to buy: The shares are actively traded on both Toronto and New York, and you will have no trouble getting a fill.

Summing up: Every so often we get an opportunity to buy bank stocks at depressed prices. Of course, the shares are nowhere near the bargain basement levels they reached in 2009, but we aren't likely to see that again.

Gordon Pape is Editor and Publisher of the Internet Wealth Builder and Income Investor newsletters.