Regulators in Europe, the United Kingdom and Mexico may be forcing financial institutions to cut or suspend their dividends, but the same is unlikely to occur in Canada, according to analysts.
Keeping dividends intact is a matter of reputation for Canada’s Big Five, which hasn’t cut payouts since 1940.
Not even the financial crisis, which saw U.S. and European banks slash payouts across the board, made the Big Five waver.
The reliable stream of income, not the stock performance, is why investors hold the group in such high regard.
“The Big Five has such a long history of not cutting their dividends,” said Cormark Securities analyst Meny Grauman. “There’s an investor premium earned as a result of that huge amount of time, safety and security of the dividend. You’d rather keep that intact and go raise equity at less than preferable terms.”
The global economic shutdown brought upon by the