ADR Stocks, Top 100

4 Canadian Bank Stocks Raising Dividends

Dividend investors should take a look at Canadian banking stocks, which have high dividends, heightened regulation, and strong balance sheets. Canada’s banking regulator back in April allowed banks to reduce minimum capital requirements even further to keep lending from contracting during the economic downturn. Dividend yields on Canadian bank stocks thus have remained firm and three key stocks in the sector raised their dividends last month. The fourth is expected to raise its dividend within the next month. These northern banks have pledged to keep their dividends safe. One reasons are low payout ratios.

With payout ratios generally below the 50% range, Canadian banks have flexibility to weather a further slowdown better than their European and U.S. counterparts. These banks can survive an steeper earnings slowdown without necessarily having to reduce dividend payments. This is why these stocks can continue offer high dividends with relative safety for income investors.

Canada’s economy contracted less than the U.S. and many European peers. Prime Minister Justin Trudeau’s plan to provide stimulus has more than offset the impact of the recession on family finances across the major provinces in Canada. Canada’s economy is now at 94 per cent of February’s levels, better than the U.S. The housing market shattered records in July despite the uncertainty surrounding the COVID-19 pandemic. The outlook for housing in the fall looks solid. When compared to countries around the world, Canada is faring well in terms of managing COVID-19 transmission. Data from the European Center for Disease Prevention and Control that tracks new cases shows Canada is among the countries with the lowest rates of transmission worldwide. This provides an extra safety level for the economy and the banking sector.

Here are 4 Canadian banks to potentially consider that all raised dividends;

Canadian Imperial Bank5.45 Yield10.1 P/E35,306 Mkt Cap$79.41 Price6% RaiseCM
Bank of Montreal4.93 Yield10.2 P/E40,674 Mkt Cap$62.83 Price4% RaiseBMO
National Bank of Canada3.85 Yield11.1 P/E18,398 Mkt Cap$54.32 Price3% RaiseNTIOF
*Raised its dividend last September. Expect another 3% raise this month.
Royal Bank of Canada4.17 Yield11.6 P/E107,983 Mkt Cap$75.72 Price3% RaiseRY

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