Big 5 Canadian Bank Stocks Ranked by Dividend Yield
The Canadian banking sector has been one of the top-performing sectors in 2021. After most banks faced big
challenges due to the global pandemic last year, the ongoing economic recovery is helping the Big Five Canadian
banks recover much faster than expected. Their decent dividends and stable earnings growth are also the reason
why investors prefer to invest in TSX bank stocks.
Bank of Nova Scotia: 4.6%
Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) stock currently tops the list of Big Five Canadian bank stocks, as its stock
offers a strong dividend yield of 4.6%. The stock is trading at $78.51 per share with about 14% year-to-date gains.
Scotiabank’s earnings growth has consistently been improving for the last three consecutive quarters on a
sequential basis. Overall, its strong capital position, steadily improving financial performance, and international
expansion strategy make it one of the best bank stocks to own right now.
Canadian Imperial Bank of Commerce: 3.9%
Canadian Imperial Bank of Commerce’s (TSX:CM)(NYSE:CM) stock currently has the second-highest dividend yield
among the Big Five Canadian bank stocks. Its stock currently trades at $148.05 per share after gaining 36% in 2021.
By comparison, the TSX Composite Index has risen by 18% this year so far. In the last few quarters, Imperial Bank’s
commercial banking segment growth has remained strong due to its focus on expanding its client base in Canada
and the United States. The bank has also been investing in new technology to enhance the client experience, which
could help it grow faster in the long term.
Toronto-Dominion Bank: 3.8%
Toronto-Dominion Bank’s (TSX:TD)(NYSE:TD) dividend yield is a tad lower than CIBC right now — at around 3.8% at
its market price of $82.94 per share. TD Bank is on the path to a sharp financial recovery after facing pandemic-
related headwinds last year. Rising customer activity is driving higher volumes in its personal and commercial
banking segments, adding to the bank’s fee income. That’s why Street analysts expect its fiscal year 2021 adjusted
earnings to be around $7.71 per share — much stronger than pre-pandemic levels. Despite all these positive
factors, TD Bank stock has underperformed the broader market so far this year, giving long-term dividend investors
an opportunity to buy its stock cheap.
Bank of Montreal and Royal Bank of Canada: 3.3%
The shares of Bank of Montreal (TSX:BMO)(NYSE:BMO) and Royal Bank of Canada (TSX:RY)(NYSE:RY) currently have
a 3.3% dividend yield right now. But having lowest dividend yield among the Big Five Canadian banks doesn’t mean
that these two bank stocks aren’t worth investing in. Bank of Montreal has assets worth $971 billion and a huge
customer base of over 12 million globally. Apart from its highly profitable business in Canada, the bank also has a
strong deposit share in the U.S. market. BMO is currently aiming for a digital-first operating model, which should
drive higher growth in the coming years by enhancing customer experience. Royal Bank of Canada currently has a
market cap of about $185 billion, making it the largest Canadian bank among the Big Five. The bank’s disciplined
approach to risk and cost management, well-diversified revenue streams, and sustainable dividend growth make it
a great long-term investment — especially for conservative investors. While BMO stock has risen by 33% in 2021,
Royal Bank has yielded a 24% positive return this year so far.
Monthly Dividend Leaders: 3 TSX Stocks Paying Dividends Every 30 Days
Investing in dividend stocks can help you start a passive income stream. Moreover, investors can better align their
investment income with regular financial commitments such as rent by choosing stocks that offer more frequent
payouts, such as monthly dividends. Furthermore, these TSX stocks enable investors to reinvest dividends every 30
days. Reinvesting more frequently can boost your long-term returns and help create significant wealth.
Monthly dividend stock #1
Among the leading Canadian companies that offer monthly payouts, SmartCentres Real Estate Investment Trust
(TSX:SRU.UN) looks attractive due to its solid dividend payments and high yield. The real estate investment trust
(REIT) offers a high yield of 7.1%. SmartCentres REIT owns a defensive portfolio of real estate, including high-traffic
retail shopping centres and mixed-use properties. Moreover, it has a high-quality tenant base of large retailers that
drives occupancy and rent collection and supports its net operating income (NOI) and payouts. The REIT continues
to benefit from solid leasing demand from both its existing tenants and new retailers. Moreover, SmartCentresâ
occupancy rate stood at 98.2% at the end of the second quarter (Q2) of 2024. SmartCentres leadership highlighted
that the firm was able to lease its properties at higher rents. Further, the company management expects the
leasing, renewals, and renewal rate momentum to sustain in the coming quarters. While SmartCentres retail
portfolio will likely deliver consistent growth, the company revenue diversification strategy through expansion into
mixed-use developments such as residential, office, and self-storage properties will likely accelerate its growth
rate. Also, SmartCentres REIT has a large land bank, which augurs well for future growth.
Monthly dividend stock #2
Within REITs, investors could consider investing in Canadian Apartment Properties REIT or CAPREIT (TSX:CAR.UN).
The REIT owns multi-unit residential properties like apartment buildings, townhouses, and manufactured home
community sites and distributes monthly cash. CAPREIT benefits from its high occupancy rate and growth in
average rents. Further, its focus on controlling costs supports its NOI and dividend payouts. Notably, CAPTREIT
occupancy rate stood at 98.2% on June 30, 2024 (end of Q2). Thanks to higher occupancy and rents, its operating
revenue and NOI increased by 5.4% and 7.2%, respectively, in Q2. CAPREIT is focusing on acquiring high-quality
premium rental properties and divesting non-core assets. This move will likely improve its financials and position it
well to enhance its shareholders return through regular dividend payments. Further, CAPREIT solid balance sheet,
low leverage profile, and sustainable payout ratio suggest that investors can rely on this REIT for monthly cash.
Monthly dividend stock #3
Whitecap Resources (TSX:WCP) is a leading monthly dividend stock for passive income investors. The company
operates in the energy sector and has a solid portfolio of premium assets with low maintenance capital
requirements. Further, the companys cost-efficient structure and increasing production volumes support its
financials and distributions. Whitecap plans to grow its asset base, which will drive its future cash flows. Further, its
focus on an efficient conventional drilling program will cushion its earnings. The company has consistently grown
its production and funds flow at a double-digit rate since 2010. Moreover, this momentum is likely to sustain given
its high-quality assets, low debt structure, and strong balance sheet. Currently, Whitecap pays a monthly dividend
of $0.061 per share, reflecting an attractive yield of 6.7%.
