Big banks hold off on dividend hikes for now

Article Excerpt

Canada’s big banks are weathering the COVID-19 pandemic. Still, federal regulators have directed them to suspend share buybacks and put off dividend increases for now. That prudence works to protect the current, high-yielding payments of Royal Bank and Bank of Montreal. ROYAL BANK OF CANADA, $93 is a buy. The bank (Toronto symbol RY; Income-Growth Portfolio, Finance sector; Shares outstanding: 1.4 billion; Market cap: $130.2 billion; Dividend yield: 4.6%; Dividend Sustainability Rating: Highest; www.rbc.com) last raised its quarterly dividend with the May 2020 payment. Investors now receive $1.08 a share, up 2.9% from $1.05. The new annual rate of $4.32 yields a high 4.6%. In its fiscal 2020 second quarter, ended April 30, 2020, COVID-19 forced Royal to increase its loan-loss provisions to $2.83 billion from $426 million a year earlier. As a result, the bank’s earnings fell 54.1%, to $1.48 billion from $3.23 billion. Per-share earnings dropped 54.5%, to $1.00 from $2.20. If you factor out unusual items, the bank earned $1.03 a share in…

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