Understanding the Dividend Prospects of National Bank of Canada
National Bank of Canada (NTIOF, Financial) recently announced a dividend of $1.06 per share, payable on 2024-02-01, with the ex-dividend date set for 2023-12-21. 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 National Bank of Canada's dividend performance and assess its sustainability.
What Does National Bank of Canada Do?
National Bank of Canada is the sixth-largest Canadian bank. The bank offers integrated financial services, primarily in the province of Quebec as well as the city of Toronto. Operational segments include personal and commercial banking, wealth management, and a financial markets group.
A Glimpse at National Bank of Canada's Dividend History
National Bank of Canada has maintained a consistent dividend payment record since 2003. Dividends are currently distributed on a quarterly basis.
National Bank of Canada has increased its dividend each year since 2003. 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 20 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down National Bank of Canada's Dividend Yield and Growth
As of today, National Bank of Canada currently has a 12-month trailing dividend yield of 3.90% and a 12-month forward dividend yield of 4.14%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, National Bank of Canada's annual dividend growth rate was 11.90%. Extended to a five-year horizon, this rate decreased to 10.00% per year. And over the past decade, National Bank of Canada's annual dividends per share growth rate stands at 8.00%.
Based on National Bank of Canada's dividend yield and five-year growth rate, the 5-year yield on cost of National Bank of Canada stock as of today is approximately 6.28%.
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 2023-10-31, National Bank of Canada's dividend payout ratio is 0.42.
National Bank of Canada's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks National Bank of Canada's profitability 5 out of 10 as of 2023-10-31, suggesting fair profitability. The company has reported positive net income for each of 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. National Bank of Canada'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 National Bank of Canada's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. National Bank of Canada's revenue has increased by approximately 8.40% per year on average, a rate that outperforms approximately 61.43% 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, National Bank of Canada's earnings increased by approximately 16.60% per year on average, a rate that outperforms approximately 70.68% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 12.20%, which outperforms approximately 63.73% of global competitors.
Next Steps
Considering National Bank of Canada's consistent dividend payments, robust dividend growth rate, sustainable payout ratio, and solid profitability and growth metrics, the bank presents itself as a potentially attractive option for value investors interested in dividend-yielding stocks. The company's financial health and growth trajectory suggest a stable dividend outlook, making it a noteworthy consideration for portfolios focused on income generation and long-term value appreciation.
GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
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.
