Bank of Nova Scotia Boosts Quarterly Dividend 3.7% (BNS)
By: Ned Piplovic,
Bank of Nova Scotia (NYSE:BNS) rewarded its shareholders with its seventh annual payout hike by increasing its next round of quarterly dividend distributions, scheduled for late October, by 3.7%.
Over the past two decades, the company avoided dividend cuts and failed to raise its annual dividend on only one occasion. Unfortunately, the company’s share price experienced significantly more volatility, especially over the past five years. After gaining more than 80% in 2016 and 2017, the share price declined more than 15% in the first half of 2018. However, the share price has reversed direction and has been trending up over the past 75 days.
BNS’ share price just broke back above the 50-day moving average (MA) on September 17, 2018. Additionally, its 50-day MA has been trending higher since mid-August. However, the share price and the 50-day MA are still below the 200-day MA. Risk-averse investors might wait to see whether these technical indicators provide a more definitive signal of a potential continuation of the current uptrend. However, investors looking to take advantage of the upcoming quarterly dividend distribution may need to assume the risk and act before the October 1, 2018, ex-dividend date. The company will distribute its next dividend on the October 29, 2018, pay date to all eligible shareholders.
Bank of Nova Scotia (NYSE:BNS)
Headquartered in Toronto, Canada and founded in 1832, The Bank of Nova Scotia is Canada’s third largest bank in terms of deposits and market capitalization. The bank operates and provides services under the Scotiabank brand and serves approximately 24 million customers in more than 50 countries through three business segments – Canadian Banking, International Banking and Global Banking and Markets. The Canadian Banking segment itself comprises three business focus areas. The Retail and Small Business Banking provides financial advice and solutions and day-to-day banking products to individuals and small businesses. Furthermore, the Commercial Banking area delivers advice and a full suite of lending, deposit, cash management and trade finance solutions to medium and large businesses, including automotive dealers. Lastly, the bank’s Wealth Management segment delivers advice and a full suite of asset management and investment solutions. The Canadian Banking segment serves its customers through a network of nearly 1,000 branches and more than 3,600 automated teller machines (ATMs), as well as multiple methods of remote-access banking. Additionally, this segment also provides an alternative self-directed banking solution to over two million Tangerine Bank customers.
Over the past two decades, the company missed an annual dividend hike only in 2010. However, in addition to raising its annual dividend 19 times in the past 20 years, the company provided its shareholders two quarterly dividend hikes per year since 2012. Therefore, the company’s upcoming $0.658 (CA$0.85) quarterly dividend amount is 3.7% higher than the $0.634 (CA$0.82), as well as 7.6% above the $0.79 (CA$0.611) quarterly dividend payout from one year earlier. This current quarterly dividend amount corresponds to a 4.4% forward dividend yield, which is 2.5% higher than the bank’s own 2.7% average yield over the past five years.
In addition to trending ahead of its own yield average, the bank’s current yield is 44% above the 3.03% average yield of the entire Financials sectors and 33% higher than the 3.29% average yield of all companies in the Foreign Money Center Banks industry segment. Even compared to the 3.81% average yield of the segment’s only dividend-paying companies, Scotiabank’s current yield is still 14% higher.
Over the past eight years since missing a dividend hike in 2010, the company advanced its quarterly dividend amount 73%, which translates to an average annual growth rate 7.1%, or an average quarterly dividend growth rate of 1.7%. Despite a missed annual dividend hike in 2010, the bank enhanced its annual payout 750% over the past two decades, which corresponds to an average growth rate of 1.3% per year.
The bank’s share price experienced a 15% pullback between its 52-week high of $66.49 on January 31, and its 52-week low of $56.17 on July 2, 2018. However, its share price has been rising since its July bottom and has already recovered nearly 40% of its losses. The share price closed on September 24, 2018 at $60.09, which was still approximately 6% short of its level from one year earlier but 7.05% above the July low.
While the share price appears to be approaching a full recovery, the company did deliver to its shareholders a total loss of 2.75% over the past 12 months. However, the five-year total return was almost 25%. Additionally, the total return over the past three years was even better at 55%.
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Ned Piplovic is the assistant editor of website content at Eagle Financial Publications. He graduated from Columbia University with a Bachelor’s degree in Economics and Philosophy. Prior to joining Eagle, Ned spent 15 years in corporate operations and financial management. Ned writes for www.DividendInvestor.com and www.StockInvestor.com.