Advertisement
New Zealand markets closed
  • NZX 50

    12,325.60
    -3.84 (-0.03%)
     
  • NZD/USD

    0.6011
    -0.0039 (-0.64%)
     
  • NZD/EUR

    0.5519
    -0.0024 (-0.44%)
     
  • ALL ORDS

    8,209.20
    -63.50 (-0.77%)
     
  • ASX 200

    7,971.60
    -64.90 (-0.81%)
     
  • OIL

    80.25
    -2.57 (-3.10%)
     
  • GOLD

    2,402.80
    -53.60 (-2.18%)
     
  • NASDAQ

    19,522.62
    -182.47 (-0.93%)
     
  • FTSE

    8,155.72
    -49.17 (-0.60%)
     
  • Dow Jones

    40,287.53
    -377.49 (-0.93%)
     
  • DAX

    18,171.93
    -182.83 (-1.00%)
     
  • Hang Seng

    17,417.68
    -360.73 (-2.03%)
     
  • NIKKEI 225

    40,063.79
    -62.56 (-0.16%)
     
  • NZD/JPY

    94.6330
    -0.5090 (-0.53%)
     

Bank of Nova Scotia's (TSE:BNS) Dividend Will Be CA$1.06

The board of The Bank of Nova Scotia (TSE:BNS) has announced that it will pay a dividend on the 29th of July, with investors receiving CA$1.06 per share. This makes the dividend yield 6.6%, which will augment investor returns quite nicely.

Check out our latest analysis for Bank of Nova Scotia

Bank of Nova Scotia's Earnings Will Easily Cover The Distributions

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable.

Bank of Nova Scotia has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Past distributions do not necessarily guarantee future ones, but Bank of Nova Scotia's payout ratio of 70% is a good sign as this means that earnings decently cover dividends.

ADVERTISEMENT

Over the next 3 years, EPS is forecast to expand by 26.1%. The future payout ratio could be 61% over that time period, according to analyst estimates, which is a good look for the future of the dividend.

historic-dividend
historic-dividend

Bank of Nova Scotia Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2014, the annual payment back then was CA$2.48, compared to the most recent full-year payment of CA$4.24. This means that it has been growing its distributions at 5.5% per annum over that time. Companies like this can be very valuable over the long term, if the decent rate of growth can be maintained.

The Dividend's Growth Prospects Are Limited

Investors could be attracted to the stock based on the quality of its payment history. Let's not jump to conclusions as things might not be as good as they appear on the surface. It's not great to see that Bank of Nova Scotia's earnings per share has fallen at approximately 2.5% per year over the past five years. A modest decline in earnings isn't great, and it makes it quite unlikely that the dividend will grow in the future unless that trend can be reversed. Earnings are forecast to grow over the next 12 months and if that happens we could still be a little bit cautious until it becomes a pattern.

Our Thoughts On Bank of Nova Scotia's Dividend

Overall, a consistent dividend is a good thing, and we think that Bank of Nova Scotia has the ability to continue this into the future. While the payments look sustainable for now, earnings have been shrinking so the dividend could come under pressure in the future. The dividend looks okay, but there have been some issues in the past, so we would be a little bit cautious.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Taking the debate a bit further, we've identified 1 warning sign for Bank of Nova Scotia that investors need to be conscious of moving forward. Is Bank of Nova Scotia not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.