Bank of Nova Scotia: Dividends Up Despite Drop in Earnings

| About: The Bank (BNS)


The dividend train continues to roll on at Bank of Nova Scotia (NYSE:BNS), which is a Canadian bank with large Latin America operations. BNS reported a 6% drop in second quarter profit from 2007 levels, but it still managed to increase its quarterly dividend by 4.3% from C$0.47 to C$0.49. I always appreciate the raise as a shareholder.

Higher provisions for credit losses and lower capital markets revenue contributed to the earnings decline. Scotiabank said it was unlikely to meet its objective of 7 to 12 percent growth in earnings per share for the year, even as it noted that second quarter's results were better than the first quarter's, and other signals pointed to a stronger second half. The bank also did not rule out acquisitions of cheap U.S. banks in the near future.

This dividend raise by BNS continues the pattern of two increases per year that goes back a few years. The stock is now yielding 4.1%. Royal Bank of Canada (NYSE:RY) on the other hand actually failed to increase its semi-annual dividend last quarter which ended the pattern it held since January 2005. I summarized the first quarter in the Canadian banking world back in March.

From BNS Investor Relations


The following is a record of increases in the quarterly dividend per common share for the fiscal period 2005 to 2008:
 

  • Fiscal 2008:  First quarter - increased from C$0.45 to C$0.47. Third quarter - increased from C$0.47 to C$0.49.
  • Fiscal 2007:  First quarter - increased from C$0.39 to C$0.42. Third quarter - increased from C$0.42 to C$0.45.
  • Fiscal 2006:  First quarter - increased from C$0.34 to C$0.36. Third quarter - increased from C$0.36 to C$0.39.
  • Fiscal 2005:  First quarter - increased from C$0.30 to C$0.32. Third quarter - increased from C$0.32 to C$0.34.

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