A comprehensive analysis of Canadian Western Bank's dividend history, yield, and growth rates
Canadian Western Bank (CBWBF, Financial) recently announced a dividend of $0.33 per share, payable on 2023-09-28, with the ex-dividend date set for 2023-09-13. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's deep dive into Canadian Western Banks dividend performance and assess its sustainability.
Understanding Canadian Western Bank's Business Model
Canadian Western Bank is a diversified financial service organization providing banking, trust, and wealth management services. The group operates through a number of subsidiaries providing different areas of financial services. Canadian Western Bank offers business banking services including general commercial banking, equipment financing and leasing, real estate financing, and other services for small- and medium-sized companies, as well as personal banking services including chequing and savings accounts, loans, mortgages, and investment products. Canadian Western Trust is engaged in retirement, trustee, and custodial solutions for financial advisors, corporations, and individuals. The company receives maximum revenue from interest income.
Canadian Western Bank's Dividend History in Focus
Canadian Western Bank has maintained a consistent dividend payment record since 2004. Dividends are currently distributed on a quarterly basis. Canadian Western Bank has increased its dividend each year since 2007. The stock is thus listed as a dividend achiever, an honor that is given to companies that have increased their dividend each year for at least the past 16 years.
Analysis of Canadian Western Bank's Dividend Yield and Growth
As of today, Canadian Western Bank currently has a 12-month trailing dividend yield of 4.48% and a 12-month forward dividend yield of 4.59%. This suggests an expectation of increase dividend payments over the next 12 months.
Over the past three years, Canadian Western Bank's annual dividend growth rate was 4.10%. Extended to a five-year horizon, this rate increased to 5.50% per year. And over the past decade, Canadian Western Bank's annual dividends per share growth rate stands at 6.70%. Based on Canadian Western Bank's dividend yield and five-year growth rate, the 5-year yield on cost of Canadian Western Bank stock as of today is approximately 5.86%.
Assessing Dividend Sustainability: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-07-31, Canadian Western Bank's dividend payout ratio is 0.39.
Canadian Western Bank's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Canadian Western Bank's profitability 6 out of 10 as of 2023-07-31, suggesting fair profitability. The company has reported positive net income for each of year over the past decade, further solidifying its high profitability.
Future Prospects: Growth Metrics
To ensure the sustainability of dividends, a company must have robust growth metrics. Canadian Western Bank's growth rank of 6 out of 10 suggests that the company has a fair growth outlook.
Revenue is the lifeblood of any company, and Canadian Western Bank's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Canadian Western Bank's revenue has increased by approximately 6.20% per year on average, a rate that outperforms approximately 50.04% of global competitors.
The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, Canadian Western Bank's earnings increased by approximately 3.70% per year on average, a rate that outperforms approximately 33.69% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 7.40% outperforms approximately 47.15% of global competitors.
Conclusion
Given Canadian Western Bank's consistent dividend payments, impressive dividend growth rate, reasonable payout ratio, and solid profitability, the bank's dividends appear sustainable. The bank's growth metrics further indicate that it is well-positioned to continue its dividend payments and potentially increase them in the future. However, as with all investments, investors should conduct their own thorough research before making any investment decisions.
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