Canada’s banks have long been favourites of the dividend crowd. But which one offers the best dividend? Let’s look, focusing on current yields and payout ratios.
Up first is Bank of Nova Scotia (TSX:BNS)(NYSE:BNS), which pays $0.72 per share on a quarterly basis, good enough for a 4.4% yield. Its payout ratio is 51.7%.
Next is Bank of Montreal (TSX:BMO)(NYSE:BMO), which has a quarterly dividend of $0.86 per share, a yield of 4.1%. Its payout ratio is 51.6%.
Royal Bank of Canada (TSX:RY)(NYSE:RY) is Canada’s largest bank. It pays investors $0.81 per quarter for a yield of 4.1%. It has a payout ratio of 48.8%.
Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) pays investors a dividend of $1.21 per share each quarter, a 4.9% yield. It has a payout ratio of 53.1%.
Toronto-Dominion Bank (TSX:TD)(NYSE:TD) has a quarterly dividend of $0.55 per share for a current yield of 3.9%. The payout ratio is 50.1%.
And finally, National Bank of Canada (TSX:NA) has a quarterly payout of $0.55 per share for a yield of 4.9%. Its payout ratio is 64.7% because of certain one-time items. Without these write-offs the payout ratio would be closer to 50%.
CIBC looks like it offers investors the best combination of yield and a relatively low payout ratio.
The difference between 51% and 53% of earnings isn’t enough to ignore the extra yield offered by that bank.
