Canadian Western Bank is on a roll and isn't showing any signs up letting up.
Shareholders are reaping big gains, too, as the bank hiked its dividend by 18 per cent on Tuesday after posting strong fourth quarter earnings. The last dividend bump was in July, 2008, just before the equity market imploded. The quarterly dividend per share is now $0.13, representing an annual dividend yield of about 1.9 per cent.
The bank's shares have also had strong capital appreciation in 2010, with a gain of about 27 per cent year-to-date.
The bank finished the year in stride with fourth quarter profit hitting $39-million, up 29 per cent over same period last year. This equates to diluted earnings per share of 48 cents. The increase largely stems from loan growth, which hit 4 per cent last quarter as commercial real estate lending picked up.
Unlike the Big Six banks, which are built around retail banking services, Canadian Western Bank focuses on commercial business. CWB also has a different view on dividends. Because it is smaller and would rather invest in the business to help it grow, CWB's target dividend payout range is 25 to 30 per cent of net income, whereas the banks are up around 50 per cent.
Still, shareholders have something to look forward to. "We expect further dividend increases in the future as we achieve our performance objectives," president and chief executive officer Larry Pollock said.
Tim Kiladze