Canadian Banks

cutting their dividends good thing or bad? i know it sends negative signalling effects but if i were a shareholder i wouldnt mind. also the case of dilution if they issue new shares constantly to meet the dividend policies.

paying out dividends is not good for a company especially banks as banks rely on capital to generate earnings. there are mainly two reasons why i feel companies should pay dividends 1) lower return on retained earnings 2) proof that you’re not ripping them off and actually doing something with their money

well from what ive heard people will start a big sell off cause they hold CAD banks for their high dividend. If they cut the dividend share prices tank and then its even harder to raise more capital through offerings.

When did they announce they are cutting dividends? I would be very surprised if RBC or BNS do that. BMO is cutting that 12% for sure though… Every big pension fund owns the banks as dividend plays.

I agree that the Cad Banks are used as dividend plays. However, i would argue that from a business perspective, its better for the bank to actually reduce the dividends considering the fact they’re basically financing pref shares to pay off these dividends.

they never stated they will cut dividends. theres just been some buzz on what would happen if they did. and i agree they should with similar mindset to GE or any other corp that cuts their dividend


They won’t cut. It would be sacrilege.

Two years ago I’d have said that any bank cutting dividends would be a show-stopper. Nowadays I like banks cutting back since I think they need the cash more than I do. Clear the balance sheet and make money before everybody else gets healthy, too.

They’ll just issue more equity or equity equivalents. Seems to be a healthy market for them.

I’m personally hoping they don’t cut, but that is besides the point. A few years ago, cutting a dividend would be awful for them, period. However, this market is unprecedented, and it they released the proper press releases about wanting to increase liquidity positions, that damage could be minimized. Then again, for the same reason, it could drive their share price down 50%.