the country’s financial services in industry had managed to not only survive, but ultimately thrive, despite the effects of the global health crisis.
Accordingly, earlier this month, the above restrictions were lifted by OSFI, a move which was celebrated by income-thirsty investors. The four big life insurance companies in Canada have already hiked their dividends by up to 29 per cent. Although the country’s Big Six banks are yet to announce any boost in returns, some experts are anticipating big increases to be announced by the lenders, along with the upcoming earnings releases, instead of small hikes that will be spread over several quarters.
In a report titled ‘A dividend tsunami ahead (and a little buyback wave)’, Financial Markets Analyst at National Bank of Canada, Gabriel Dechaine, wrote to clients: “Following OSFI’s decision to remove capital distribution restrictions on Nov. 4, the banks are set to hike dividends en masse,”
A note from Hamilton Capital Partners in late-October projected banks to banks to raise their dividends as much as 25 per cent, adding that the hikes may be larger as profits continue to strengthen. This projection by the Toronto-based financial service provider is significantly more bullish than an average 20 per cent hike in returns forecast by Dechaine. The National Bank analyst is of the view that his own employer, together with Bank of Montreal and Royal Bank of Canada will stand out with dividend hikes larger than 20 per cent.
He expects the National Bank of Canada to reward its investors with the biggest increase in dividends, at 34 per cent, followed by the Bank of Montreal, at 28 per cent, and the Royal Bank of Canada, at 22 per cent. Meanwhile, Dechaine expects a 15 per cent increase in returns by the Canadian Imperial Bank of Commerce, while Toronto-Dominion Bank and Bank of Nova Scotia are projected to announce increases of 14 and 10 per cent, respectively.
