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Canada’s big six banks had a blockbuster first quarter in 2021, surpassing Bay Street analysts’ expectations. However, contrary to expectations, the leading lenders did not hike their quarterly dividends for the next quarter due to continued uncertainties amid the subsequent waves of COVID-19 pandemic.
These top six institutions are likely to deliver robust fiscal second-quarter earnings. But will these banks improve their dividends and extend the profits to shareholders? Five out of the top six banks will release their financial numbers this week, while Bank of Nova Scotia will announce its results on June 1.
In the fiscal first-quarter earnings, ended January 31, the big six earmarked a lower than anticipated amount towards provisions for bad loans. Most reported double-digit net income rise on a year-over-year basis. Hence, their stockholders have been expecting dividend hikes from lenders.
Central Bank’s Stance on Dividend
The Bank of Canada (BoC) announced restrictions on dividend hikes in mid-2020 amid the pandemic outbreak and rising recession fears. But by the late 2020, the central bank softened its stance and expressed hope of loosening restrictions after the pandemic-led credit losses are under control.
If the central bank releases a directive permitting the big six to raise their dividends, lenders could factor it in their balance sheets. However, the surge of deadlier COVID-19 variants could cause further delay in easing restrictions on dividend increase.
Some analysts do not see any dividend rise until the third fiscal quarter results of 2021 – the tentative time to complete the inoculation drive across Canada.
Copyright ©Kalkine Media 2021
‘Big Six’ Stock Movements & Dividend Yields:
- Bank of Montreal’s (TSX:BMO) is set to announce its earnings on May 26. Its current stock price has improved by 28 per cent to C$ 123.92 apiece this year. The lender’s stock is up 90 per cent in the past one year. Its dividend yield is 3.422 per cent.
- Shares of Royal Bank of Canada (TSX:RY) have risen 18 per cent to C$ 123.47 apiece year-to-date (YTD). Its one-year growth is up 47.50 per cent, and its present dividend yield is 3.499 per cent.
- Stocks of Toronto Dominion Bank (TSX:TD) have gained 22.50 per cent YTD. The stock price stands at C$ 88.11 apiece, and the current dividend yield is 3.586 per cent. The blue-chip stock has swelled 55 per cent in one year.
- National Bank of Canada’s (TSX:NA) stock is up 31 per cent to C$ 93.67 apiece YTD and delivers a dividend yield of 3.032 per cent. It has surged as much as 76 per cent in the past one year.
- Shares of Canadian Imperial Bank of Commerce (TSX:CM) have increased by 24.50 per cent to C$ 135.35 apiece in 2021. Its current dividend yield is 4.315 per cent. It is up 64 per cent in one year.
- Scotiabank’s (TSX:BNS) share price has zoomed by 15 per cent to C$ 79.03 apiece YTD, and its one-year return is 52 per cent. It has outperformed its peers with the current dividend yield of 4.555 per cent.
Please note: The reference data in this article has been partly sourced from Refinitiv.
