This bank did quite well through the most recent bear market with keeping the dividend level for just over 2 years. This is a dividend growth stock. It has a good dividend and moderate to good dividend growth. The current dividend yield is 4.44% and the 5 year median dividend yield is 4.05%. The 5 and 10 year dividend growth is 8.2% and 10.8% per year.
The last dividend increase was in 2015 and the dividend increase was for 5.2%. This bank also has the habit of increasing their dividends more than once in a calendar year.
The Dividend Payout Ratios are good with the 5 year median DPR for EPS at 39% and for CFPS at 32%. The DPRs for 2014 was at 42% for EPS and 32% for CFPS. The DPRs are generally lower than the other banks, especially in regards to EPS.
| Bank | Symbols | DPR for EPS | DPR for CFPS |
|---|---|---|---|
| Bank of Montreal | BMO | 47% | 37% |
| Bank of Nova Scotia | BNS | 45% | 36% |
| Royal Bank | RY | 52% | 25% |
| National Bank | NA | 39% | 32% |
| TD Bank | TD | 44% | 31% |
As I had said a few days ago, I color code my growth value on my spreadsheet. Red is for low or negative growth. Blue is for moderate growth and green is for good growth. Looking at this spreadsheet there is a lot of green with some blue figures and the odd red figure. Revenues are important to drive both EPS and CFPS. However, the growth figures for Revenue are all blue.
The outstanding shares have not changed much over the past 5 and 10 years, so we can look at both Revenues and Revenues per Shares and there is not much difference. Revenue per share is up by 5.3% and 4.6% per year over the past 5 and 10 years.
EPS is up by 11.8% and 7.9% per year over the past 5 and 10 years and CFPS are up by 10.1% and 10.2% per year over the past 5 and 10 years.
This bank has had a Return on Equity of over 10% per year over the past 20 years. The 2014 ROE is at 16.8% and it has a 5 year median of 17.1%. Unfortunately, the ROE on comprehensive income is low, but still good at 14.9% and this has a 5 year median of 14.9%. When the comprehensive income ROE is below that for net income it suggests that perhaps the net income is not all of good quality.
This bank also has the lowest Debt Ratio of all the banks I have reviewed. The Debt Ratio is at 1.05 which is ok for a bank as basically anything at or over 1.4 is fine for a bank. However, the other banks I have reviewed have Debt Ratios of 1.06 or 1.07. On the other hand, this bank has a lot of cash on hand at some $24.56 per share which is some 46.6% of the stock price. Only BMO has a lot of cash on hand also.
Sound bite for Twitter and StockTwits is: Dividend Growth Bank stock. I had wanted to look at one of the smaller Canadian banks. This one is out of Quebec and it has expanded in Alberta. Sometimes it is worthwhile to invest in smaller companies as they might have more room to grow. See my spreadsheet at na.htm.
This is the first of two parts. The second part will be posted on Friday, January 23, 2015 and will be available here. The first part talks about the stock and the second part talks about the stock price.
National Bank of Canada provides financial services to consumers, small and medium-sized enterprises, and large corporations & has branches in every province in Canada. It is also represented in the U.S. and Europe through its subsidiaries and alliances. Its web site is here Nation Bank.
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.
See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.
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