Unveiling the Dividend Prospects of Bank of Nova Scotia
Bank of Nova Scotia (BNS, Financial) recently announced a dividend of $1.06 per share, payable on 2024-04-26, with the ex-dividend date set for 2024-04-01. 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. Dividends are currently distributed on a quarterly basis.
Bank of Nova Scotia has increased its dividend each year since 2002. The stock is thus listed as a dividend achiever, an honor that is given to companies that have increased their dividend each year for at least the past 22 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Bank of Nova Scotia's Dividend Yield and Growth
As of today, Bank of Nova Scotia currently has a 12-month trailing dividend yield of 6.01% and a 12-month forward dividend yield of 6.06%, suggesting an expectation of increased dividend payments over the next 12 months.
Over the past three years, Bank of Nova Scotia's annual dividend growth rate was 5.10%. Extended to a five-year horizon, this rate decreased to 4.90% per year. And over the past decade, Bank of Nova Scotia's annual dividends per share growth rate stands at 5.70%.
Based on Bank of Nova Scotia's dividend yield and five-year growth rate, the 5-year yield on cost of Bank of Nova Scotia stock as of today is approximately 7.63%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2024-01-31, Bank of Nova Scotia's dividend payout ratio is 0.66.
Bank of Nova Scotia's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Bank of Nova Scotia's profitability 5 out of 10 as of 2024-01-31, suggesting fair profitability. The company has reported positive net income for each year over the past decade, further solidifying its high profitability.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Bank of Nova Scotia's growth rank of 5 out of 10 suggests that the company has a fair growth outlook.
Revenue is the lifeblood of any company, and Bank of Nova Scotia's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Bank of Nova Scotia's revenue has increased by approximately 1.80% per year on average, a rate that underperforms approximately 74.18% of global competitors.
The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, Bank of Nova Scotia's earnings increased by approximately 6.90% per year on average, a rate that underperforms approximately 61.5% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 1.40%, which underperforms approximately 73.65% of global competitors.
Next Steps
In conclusion, while Bank of Nova Scotia boasts a strong dividend history and a respectable yield, investors should be aware of the company's moderate growth metrics and dividend payout ratio. The fair profitability rank and positive net income reassure the stability of dividend payments, but the underperformance in revenue and earnings growth compared to peers suggests a cautious approach may be warranted. As value investors, it's essential to consider these factors when evaluating Bank of Nova Scotia as a potential addition to a dividend-focused portfolio. Will the Bank of Nova Scotia continue to reward investors with consistent dividend growth, or will the moderate growth metrics necessitate a reevaluation of its dividend prospects?
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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.
