Scotiabank (TSX:BNS) hikes dividend as profit soars in 2021. Buy alert?

Highlights 

  • The dividend hike move comes after Canada's banking regulator lifted the ban on dividend hikes.
  • For fiscal 2021, the Bank of Nova Scotia's net income catapulted to C$ 9.96 billion compared to C$ 6.9 billion last year.
  • The Bank of Nova Scotia's return on equity increased to 14.8 per cent in Q4 2021 in comparison to 11 per cent in Q4 2020.

The Bank of Nova Scotia (TSX:BNS) announced results for the fourth quarter and full-year on Tuesday, November 30. It said that it will raise its quarterly dividend by 11 per cent to C$ 1 per share.

The dividend hike move comes after Canada's banking regulator lifted the ban on dividend hikes and shares buybacks. Due to the COVID-19 pandemic, the regulatory authorities had restricted the banks from hike their dividends.

Apart from increasing the dividend, Scotiabank said that it will repurchase around 24 million of its shares. That said, let's take a look at the financial performance of one of the biggest banks in the country and find out if it is worth your time and money:

Is Bank of Nova Scotia (TSX:BNS) a buy?

For fiscal 2021, the Bank of Nova Scotia's net income catapulted to C$ 9.96 billion compared to C$ 6.9 billion last year. Meanwhile, in the fourth quarter of this year, which ended on October 31, the bank's net income jumped to C$ 2.56 billion from C$ 1.9 billion in Q4 2020. 

 BNS hikes dividend and will buyback shares

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Beating the analysts' estimates, Scotiabank earned C$ 2.1 per share on an adjusted basis. Notably, the estimates were that the bank would earn C$ 1.91 apiece.

Also Read: 3 TSX dividend stocks to buy as the year-end approaches

In the latest quarter, Scotiabank produced solid financial results due to improvement in credit quality. Scotia's provision for loan losses declined to C$ 168 million in comparison to C$ 380 million in the third quarter of this year.

Notably, the profit from international operations more than doubled in Q4 2021 to C$ 528 million, up from C$ 263 million in Q4 2020.

Brian Porter, Chief Executive Officer and President at Scotiabank said that a diversified business model helped the bank sail through the pandemic crisis, and it is well-positioned to achieve its full earnings potential in 2022.

Bottom line


The Bank of Nova Scotia's return on equity increased to 14.8 per cent in Q4 2021 in comparison to 11 per cent in the same quarter of the previous year.

In terms of stock performance, the BNS stock has surged 18.4 per cent year-to-date (YTD) and during this period it beat the TSX 300 Composite Index as it declined by 2.4 per cent.

On November 25, the BNS stock clocked a 52-week high of C$ 83.99 per share.

Also Read: 2 off-the-radar TSX dividend stocks to buy

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