Q: good morning. just read your report on bns and was hoping to hear what you thought of the dividend in the future. To be short it has been very disapointing in growth over many years and just wondering what were your thoughts going into the future.
I realize it has a good dividend now but as a dividend growth investor i also want some growth. Do you see any in the future?
I realize it has a good dividend now but as a dividend growth investor i also want some growth. Do you see any in the future?
5i Research Answer:
The dividend growth and general performance of BNS relative to other Canadian banks over the long term certainly has been disappointing. We think as the economic environment improves, it will make it easier for the big banks to raise their dividends. BNS' payout ratio is quite high right now at about 75% which is one of the highest amongst the competitor banks. Earnings growth and a lowering payout ratio could be key for BNS. We think it's previous lagging performance and new regime make BNS one of the more attractive Canadian banks right now due to its growth upside.