Canadian Banks Increasing Dividends Again

I’ve made a lot of noise in past posts about how I love Canadian bank stocks. That is definitely not a secret to Dividend Money readers.

As always, I like to point out various main stream media articles that reinforce my theory that the Canadian Banks are some of the greatest dividend plays available for dividend growth investors.

John Heinz, from Report on Business, recently outline some of the major benefits of Canadian bank stocks that I have been touting since day one here at Dividend Money.

TD announced a third-quarter profit of $1.1-billion, up 38 per cent from a year earlier. TD had another piece of uplifting news for investors: It boosted its quarterly dividend by 4 cents, to 57 cents a share – an increase of nearly 8 per cent.You didn’t have to be a genius to see this coming. In recent years, Canada’s third-biggest bank has established a pattern of bumping its dividend every other quarter, hiking its payout at a five-year annual rate of 12.5 per cent.

John is correct that you don’t have to be a genius to see it coming. We’ve been following the Canadian bank dividend increases for quite some time. He also mentions a couple of our other favorite stocks as good dividend plays.

TD is just one example. Some other banks have been boosting their dividends at an even faster clip. Royal Bank [RY-T], which reports today and which some analysts expect will announce a hike, has been raising its payout at an 18.4-per-cent annual pace, just behind Bank of Nova Scotia [BNS-T], at 18.8 per cent.

Other companies sporting double-digit dividend growth rates include Manulife Financial, Sun Life Financial, Power Financial, Reitmans and Shaw Communications.

John examines the dividend history of TD Bank, which is always of interest to us dividend investors. Here is what he found:

A 4-cent increase may seem like peanuts, but over time such small dividend increases add up. TD’s payout is now twice as big as it was just five years ago; had you bought the stock in August, 2002, the dividend yield on your original investment would be 6.7 per cent. As well, the stock has more than doubled.

And, the thing is, unless the economy gets really ugly, TD’s dividend is expected to keep rising. According to Bloomberg forecasts, it will jump to 62 cents in February, 65 cents next August and 68 cents by February, 2009. By 2010, it should be up around 76 cents.

These estimates are what many dividend investors will analyze in order to project future dividend rates and returns.

Obviously these numbers are not set in stone, but we can take comfort in knowing that TD Bank has been paying consecutive dividends to its shareholders since 1857…not too shabby eh?

Disclosure: I do own shares of TD, RY, and BNS. 


  1. I’m just looking at Bank of Montreal (BMO) and I think its time to bring that up with current yields over fixed income rates.
    What do you think?

  2. Garth,
    If you look up the symbol for the stock on a site such as the information in the table listed for the stock will include a number for Dividend yield. That is one step in finding out if the stock pays a dividend. Alternatively, you could look for the company website of the stock you have purchased. The company should have an investor relations page that will tell you more information about the company and the stock of that company.
    Hope this helps!

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