Thursday, December 6, 2007

Scotia hikes dividend

The Bank of Nova Scotia (BNS) raised its dividend today by almost 5% to $0.47 / share. BNS has been raising its dividend twice annually for many years. The last raise for the Q3 2007 dividend was by almost 7%. Only raising by 5% this time around seems to be indicating an expectation by the bank for slower earnings growth in 2008.

Overall BNS has raised their dividend...:

+14% to 2006
+16% to 2007
...and I'm going to take the liberty to assume +10% to 2008 given this latest raise and a conservative estimate of a 4% raise for Q3 of 2008.

From their Investor Relations Dept:
Scotia's dividend policy is to relate dividends to the trend earnings, while ensuring that capital levels are sufficient for both growth and depositor protection. The Bank's dividend payout is currently in the range of 35 to 45% of net income.

6 comments:

Nurse B, 911 said...

Yep,

It's definitely a rough life when these companies continuously raise their dividends and your original yield on the investment continues to climb :)

4Life said...

MG: Is there any sign of a mortgage/credit crisis in Canada like we have experienced in the U.S.? Put another way, do you see additional downside risk on the Canadian banks?

Best Wishes,
D4L

MG said...

hi brad,
It's nice isn't it? These are my favourite bits of news...

D4L,

There is no sign of a mortgage crisis in Canada. I believe our lending standards are higher here. Also there has not been the degree of speculation that there has been in the U.S.

I don't see additional downside risk on Canadian Banks. Their growth is slowing but they are still pretty solid and participate in an oligopoly.

Anonymous said...

MG: I see you have BMO on your watch list. Are you still interested in that bank? They've flirted recently with their 3 year low...

RickT

MG said...

Hi Rick,
I've watched BMO for a while but for the premium they offer in yield I like BNS and RY that much better. I think people will do fine with BMO but their earnings growth will probably be weaker than BNS,RY, and TD in the short term.

Joe said...

What do you think of DB?