The board of National Bank of Canada (TSE:NA) has announced that it will be paying its dividend of CA$1.02 on the 1st of August, an increased payment from last year's comparable dividend. This makes the dividend yield about the same as the industry average at 4.1%.
National Bank of Canada's Dividend Forecasted To Be Well Covered By Earnings
We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue.
National Bank of Canada has a long history of paying out dividends, with its current track record at a minimum of 10 years. Based on National Bank of Canada's last earnings report, the payout ratio is at a decent 40%, meaning that the company is able to pay out its dividend with a bit of room to spare.
The next 3 years are set to see EPS grow by 2.5%. Analysts forecast the future payout ratio could be 45% over the same time horizon, which is a number we think the company can maintain.
National Bank of Canada Has A Solid Track Record
The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. Since 2013, the annual payment back then was CA$1.58, compared to the most recent full-year payment of CA$4.08. This means that it has been growing its distributions at 10.0% per annum over that time. The growth of the dividend has been pretty reliable, so we think this can offer investors some nice additional income in their portfolio.
The Dividend Looks Likely To Grow
Investors could be attracted to the stock based on the quality of its payment history. It's encouraging to see that National Bank of Canada has been growing its earnings per share at 10% a year over the past five years. Shareholders are getting plenty of the earnings returned to them, which combined with strong growth makes this quite appealing.
We Really Like National Bank of Canada's Dividend
In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. Taking this all into consideration, this looks like it could be a good dividend opportunity.
Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Companies that are growing earnings tend to be the best dividend stocks over the long term. See what the 10 analysts we track are forecasting for National Bank of Canada for free with public analyst estimates for the company. Is National Bank of Canada not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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