Monte dei Paschi di Siena: Dividend Yield Is Almost 12%, But Beware Of Risks

2025-06-04 17:30:32 ET

Summary

• BMDPF has transformed into a more solid, diversified bank with strong capital ratios and reduced government ownership, but its troubled past still weighs on sentiment.
• The recent triple-digit rally brings BMDPF closer to fair value; further outsized gains are unlikely, but a collapse also seems improbable given current fundamentals.
• A 12% dividend yield appears attractive but is unreliable—BMDPF has no consistent dividend policy and payouts are highly cyclical and unpredictable.
• I rate BMDPF as a hold: it’s not overvalued compared to peers, but caution is warranted due to its volatile history and uncertain dividend sustainability.

Intro

Since my last article on Monte dei Paschi di Siena ( BMDPF ) approximately seven months have passed and the stock has recorded a total return of +50%, significantly outperforming the S&P 500. Given that my rating at the time was a sell, I would say that I was significantly mistaken and overly pessimistic. My investment thesis was too influenced by the bank's past, as it had been repeatedly bailed out by the government after several near-bankruptcies....

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