– By Nathan ParshThe Canadian banks proceed to seem like a very good place for traders looking for to seek out yield and low valuations. Most of the bigger names have already reported earnings, however some have additionally introduced dividend will increase. All of the of the stocks mentioned have a dividend yield of greater than 4% and commerce with a low price-earnings ratio.Bank of MontrealBank of Montreal (NYSE:BMO) is without doubt one of the largest monetary establishments in Canada primarily based on belongings. The corporate additionally operates in 17 worldwide markets, together with the U.S. The corporate is at present valued at $41 billion and has generated gross sales of $17.6 billion over the past 12 months. The stock has declined nearly 18% yr so far.On Aug. 26, Bank of Montreal introduced a 4% dividend increase for the Nov. 26 cost. That is the ninth yr in a row that the bank has elevated its dividend. The corporate’s dividend remained the identical, however was not lowered, in Canadian foreign money between 2008 and 2011. Based on Worth Line, U.S. traders have skilled a compound annual development price for the corporate’s dividend of simply 1.3% since 2010. U.S. traders ought to obtain $3.16 of dividends per share in 2020, which is a 3.3% improve from 2019.Shares yield 4.9% in the present day. That is above the 10-year common yield of 4.2% that the stock has had since 2010. The Bank of Montreal’s yield can be considerably increased than the 1.7% common yield for the S&P 500.Based on Looking for Alpha, the analyst neighborhood expects the Bank of Montreal to supply earnings per share of $5.47 this yr. Utilizing the latest price of $64, the stock has a ahead price-earnings ratio of 11.7. That is almost in step with the typical of 11.Four occasions earnings that the stock has traded with since 2010. The valuation seems to be even higher when in comparison with the typical price-earnings ratio of 30 for the S&P 500.Whereas dividend development has been anemic over the past decade, Bank of Montreal shareholders can have a year-over-year improve in dividends this yr that far surpasses the long-term common. As well as, the rise for the upcoming cost is thrice the annual development over the past 10 years. The Bank of Montreal’s valuation is near its long-term common, so there may not be a lot a number of growth available. That mentioned, the stock is not all that overvalued and provides a a lot increased than common yield.Bank of Nova ScotiaThe Bank of Nova Scotia (NYSE:BNS), extra generally referred to as Scotiabank, ranks third amongst Canadian banks utilizing belongings. The corporate has extra of a world presence than its friends, with operations in additional than 50 worldwide markets. Scotiabank has a market capitalization of $53 billion. The bank had gross sales of virtually $24 billion over the past yr. Shares have misplaced greater than 22% this yr.Scotiabank raised its dividend 4% on Thursday for the cost to be made on Oct. 28. The bank now has a decade of dividend development. The corporate paused its dividend development in 2010, the shortest size of pause through the Nice Recession of the three Canadian banks mentioned. Scotiabank has compounded its dividend by a price of three.4% per yr over the past 10 years. U.S. traders are anticipated to obtain $2.67 in dividends in 2020, which is simply 1.5% increased than final yr’s whole.Whereas Scotiabank trails the opposite two names on this record by way of year-over-year dividend development this yr, the stock has a present yield of 6%. The present yield compares very favorably to the 10-year common yield of 4.1%. That is the biggest discrepancy between the present yield and the long-term yield on this record.The stock trades at roughly $44 and analysts forecast that the bank can earn $3.93 per share this yr, giving the stock a ahead price-earnings ratio of 11.2. That is under the long-term common a number of of 11.eight occasions earnings.Scotiabank’s dividend development is weaker than its friends, however the stock is undervalued in opposition to its historic common. The stock additionally provides an especially excessive yield. Traders who discover a extra sizeable worldwide presence in addition to a grander yield may discover Scotiabank a beautiful funding possibility.Royal Bank of CanadaWith a market capitalization of greater than $110 billion, Royal Bank of Canada (NYSE:RY), or RBC, is the biggest bank in Canada. The bank can be the biggest within the nation in time period of whole belongings. RBC has generated almost $36 billion in gross sales over the past yr. The stock is down 2% yr so far, however that is the very best efficiency on this record.Story continuesRBC raised its dividend by 2.7% the identical day that the Bank of Montreal did for the cost to be made on Nov. 24. This marks 10 consecutive years of dividend development following pauses in 2009 and 2010. U.S. traders have seen dividends compound at an annual price of 4.7% since 2010. These traders will see $3.19 in dividends per share this yr, which is a 4.2% enchancment from the earlier yr.Shares at present yield 4.1%, which is simply above the decade-long common yield of three.9%. That is nearly 2.5 occasions the typical yield of the S&P 500.Shares of RBC commerce arms at round $78. Utilizing analysts estimates for earnings per share of $5.83 for 2020, the stock trades with a ahead price-earnings ratio of 13.4. This compares unfavorably to the 10-year common price-earnings ratio of 12.4.RBC is barely overvalued in the present day, however has held up the very best this yr among the many Canadian banks mentioned. Whereas the valuation is barely above the long-term common, shares provide a higher than regular yield. Earnings traders may resolve that the yield and share price resiliency is worth the valuation commerce off.Last thoughtsThe Canadian banks mentioned commerce with low valuations and beneficiant dividend yields. Solely Scotiabank has a ahead price-earnings ratio decrease than its 10-year common, however the earnings multiples for Bank of Montreal and RBS are removed from stretched. Every stock additionally offers a yield that ought to enchantment to revenue traders even when the dividend development charges go away loads to be desired.Traders in search of low valuation and excessive yields ought to contemplate buying shares of the Bank of Montreal, Scotiabank and Royal Bank of Canada.Disclosure: The writer has no place in any stock talked about on this article.Learn extra right here:Not a Premium Member of GuruFocus? Join a free 7-day trial right here.This text first appeared on GuruFocus.