Delving into the Dividend Profile of Bank of Nova Scotia (BNS, Financial)
Bank of Nova Scotia (BNS) recently announced a dividend of $1.06 per share, payable on 2024-01-29, with the ex-dividend date set for 2024-01-02. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into Bank of Nova Scotia's dividend performance and assess its sustainability.
What Does Bank of Nova Scotia Do?
Bank of Nova Scotia is a global financial services provider. The bank has five business segments: Canadian banking, international banking, global wealth management, global banking and markets, and other. It offers a range of advice, products, and services, including personal and commercial banking, wealth management and private banking, corporate and investment banking, and capital markets. The bank's international operations span numerous countries and are more concentrated in Central and South America.
A Glimpse at Bank of Nova Scotia's Dividend History
Bank of Nova Scotia has maintained a consistent dividend payment record since 1989, with distributions on a quarterly basis. The bank has increased its dividend each year since 2002, earning it the status of a dividend achiever, a distinction given to companies with at least 22 years of consecutive dividend increases. Below is a chart showing annual Dividends Per Share to track historical trends.
Breaking Down Bank of Nova Scotia's Dividend Yield and Growth
Bank of Nova Scotia currently has a 12-month trailing dividend yield of 6.37% and a forward dividend yield of 6.40%, indicating an expectation of increased dividend payments over the next year. The bank's dividend growth rate over the past three years was 5.10%, which decreased slightly to 4.90% over a five-year period. However, looking at the past decade, the annual dividends per share growth rate stands at 5.70%. Consequently, the 5-year yield on cost for Bank of Nova Scotia stock is approximately 8.09%.
The Sustainability Question: Payout Ratio and Profitability
The dividend payout ratio of Bank of Nova Scotia is 0.72 as of 2023-10-31, which may suggest concerns about sustainability. To provide context, the payout ratio indicates the percentage of earnings distributed as dividends, with a lower ratio implying more retained earnings for growth and stability. Additionally, Bank of Nova Scotia's profitability rank is 5 out of 10, reflecting fair profitability with a consistent track record of positive net income over the past decade.
Growth Metrics: The Future Outlook
Bank of Nova Scotia's growth rank is also 5 out of 10, suggesting a fair growth outlook. Its revenue per share and 3-year revenue growth rate, averaging an increase of 1.80% per year, underperform approximately 76.11% of global competitors. The 3-year EPS growth rate of 6.90% per year and the 5-year EBITDA growth rate of 1.40% also underperform against a considerable number of global competitors, indicating areas where the bank could improve.
Next Steps
In conclusion, while Bank of Nova Scotia has a strong history of dividend payments and is recognized as a dividend achiever, investors should closely monitor the payout ratio and growth metrics. The bank's fair profitability and growth outlook suggest a cautious approach to its long-term dividend sustainability. As value investors seek to make informed financial decisions, it is essential to consider both the quantitative dividend data and qualitative factors such as the bank's strategic initiatives and competitive position. Will Bank of Nova Scotia continue to provide a reliable income stream for shareholders? Only time and a thorough analysis will tell.
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
