These 2 Stocks Just Gave Their Shareholders a Raise

Toromont Industries Ltd. (TSX:TIH) and Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) recently raised their dividends by 3-22%. Which should you invest in today?

| More on:

Toromont Industries Ltd. (TSX:TIH) and Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) just made their shareholders very happy when they announced dividend increases of up to 21.1%. Let’s take a closer look at each company and their new dividends, so you can determine if you should add one of them to your portfolio today.

Toromont Industries Ltd. 

Toromont Industries Ltd. operates through two business segments: The Equipment Group and CIMCO. The Equipment Group is one of Canada’s largest Caterpillar dealerships by revenue and geographic territory, and CIMCO is one of North America’s leading providers of industrial and recreational refrigeration systems.

In its fiscal 2017 fourth-quarter and full-year earnings release on February 22, Toromont announced a 21.1% increase to its quarterly dividend to $0.23 per share, equating to $0.92 per share on an annualized basis, which brings its yield up to about 1.6%.

Foolish investors should make three additional notes about the new dividend.

First, the first quarterly payment at the increased rate will come on April 2 to shareholders of record on March 9.

Second, this dividend hike puts Toromont on track for 2018 to mark the sixth straight year in which it has raised its annual dividend payment.

Third, I think the company’s very strong financial performance, including its 38.5% year-over-year increase in operating cash flow to $261.51 million and its 11.6% year-over-year increase in earnings to $2.22 per share in 2017, will allow it to continue to deliver dividend growth to its shareholders for another six years at least.

Bank of Nova Scotia

Bank of Nova Scotia is the third-largest bank in Canada as measured by assets with approximately $923.15 billion as of January 31.

In its fiscal 2018 first-quarter earnings release on February 27, Bank of Nova Scotia announced a 3.8% increase to its quarterly dividend to $0.82 per share, equating to $3.28 per share on an annualized basis, which brings its yield up to about 4.1%.

It’s important to make three additional notes about the new dividend.

First, the first installment at the increased rate will come on April 26 to shareholders of record at the close of business on April 3.

Second, Bank of Nova Scotia was already on pace for fiscal 2018 to mark the eighth consecutive year in which it has raised its annual dividend payment, and this hike puts in on pace for fiscal 2019 to mark the ninth consecutive year with an increase.

Third, the company has a target dividend-payout range of 40-50% of its adjusted net income attributable to common shareholders, so I think its continually strong growth, including its 18.4% year-over-year increase to $1.87 per share in the first quarter of fiscal 2018, will allow it to continue to grow its dividend in fiscal 2020 and beyond.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Joseph Solitro has no position in any of the stocks mentioned.

More on Dividend Stocks

Two seniors float in a pool.
Dividend Stocks

TFSA: How to Earn $1,890 in Annual Tax-Free Income

Plunk these investments into your TFSA to earn passive income and avoid the taxman.

Read more »

Engineers walk through a facility.
Dividend Stocks

1 TSX Stock I Wouldn’t Touch With a 10-Foot Pole

AtkinsRéalis (TSX:ATRL) is one TSX stock I'd never invest in.

Read more »

edit Woman in skates works on laptop
Dividend Stocks

3 No-Brainer Stocks to Buy Under $30

These three stocks all offer a huge deal for investors looking for dividends, as well as growth that will last.

Read more »

You Should Know This
Dividend Stocks

How to Convert a $300 Monthly Investment Into $338 in Monthly Income

If you want a certain amount in monthly passive income, invest a similar amount today and leave the rest to…

Read more »

Increasing yield
Dividend Stocks

3 Income Stocks With Big Yields to Consider in April 2024

If you haven’t yet made your March investments, here are three income stocks to buy the dip and lock in…

Read more »

Senior Man Sitting On Sofa At Home With Pet Labrador Dog
Dividend Stocks

RRSP Investors: Don’t Miss Out on This Contribution Hack!

This hack has so many benefits for you -- not just when you put it in your RRSP but for…

Read more »

A red umbrella stands higher than a crowd of black umbrellas.
Dividend Stocks

Passive Income: 2 Safe Dividend Stocks to Own for the Next 10 Years

Dividend stocks such as Manulife and Fortis can help you generate a stable and recurring passive-income stream.

Read more »

Young woman sat at laptop by a window
Dividend Stocks

3 Dividend Stocks Everyone Should Own for the Long Haul

For investors looking for top-tier dividend stocks to buy and hold for the long term, here are three of my…

Read more »