Dividend investors seeking high yields may feel like they're looking for a needle in a haystack when S&P 500 dividend equities average 1.3%. Luckily, there are still some intriguing high-yield options if you look hard. Bank of Nova Scotia (NYSE: BNS) and EPR Properties are worth considering today. A simple primer to get you started.
Scotiabank dividends since 1833 Scotiabank is one of Canada's largest banks. Canadian banks are strictly regulated, ensuring industry giants like Scotiabank have established positions. Conservative government rules have made the largest banks cautious. Scotiabank tends to avoid danger.
However, it has historically approached growth differently. Most Canadian banks have expanded into the US. South America was Scotiabank's growth focus. Despite its higher risk, that region hasn't affected the company's stellar dividend history.
Since 1833, Bank of Nova Scotia has paid dividends continuously, less than a decade from 200. However, the 6.2% dividend yield is high for banks. SPDR S&P Bank ETF (NYSEMKT: KBE) yields 2.8%. Scotiabank appears undervalued compared to other banks.
Why? Scotiabank trails its peers in earnings, return on equity, and operating leverage. Investors care about corporate performance. Management has a plan to close the deficit (including lessening its concentration on South America), but it will take time. The corporation is certain it can maintain the dividend while improving performance.
Yield-seeking investors should give this Canadian banking giant a chance due to its conservative outlook and extensive dividend history. Get a nice 6.2% yield as you wait for Scotiabank's intentions.
EPR Properties: Well-covered dividend return REIT EPR Properties owns experiential properties. The list covers amusement parks, ski resorts, and theaters. The early days of the coronavirus pandemic were difficult for landlords of enterprises that bring people together. To be safe, EPR stopped its dividend.
As the globe learns to live with COVID-19, EPR's dividend is back and many of its tenants are healthier than before. Due to long-term market headwinds like streaming media at home, the REIT's movie theaters are still struggling. Movie theaters have 1.7 times rent coverage, approximately where it was before the pandemic. But the rest of the portfolio has 2.6 times rent coverage, up from 2.0 before the public health crisis.
EPR is working with theater tenants (rent coverage is improving), selling assets, lowering lease prices, and seeking new tenants for unoccupied assets. EPR will need time to overcome theater market headwinds since theaters account approximately 37% of its rent roll. This helps explain the shares' 7.9% yield. The typical REIT yields 4%, using Vanguard Real Estate ETF (NYSEMKT: VNQ) as a proxy.
While risk-averse investors should be cautious, bold ones can benefit. The forward dividend and 2023 adjusted FFO suggest a 66% adjusted FFO payout ratio. That's a good number that allows EPR to maintain the high return while reworking its movie theater portfolio. If you can handle some uncertainty, it's a good trade-off.
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