The Financial Post reports in its Tuesday edition that 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. The Post's Victor Ferreira writes that keeping dividends intact is a matter of reputation for Canada's Big Five, which has not cut any payouts since 1940 -- not even the financial crisis. 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." What the Big Five has going its way is that dividend ratios, the percentage of earnings paid to shareholders, have not yet climbed above 100 per cent -- a level only reached twice in the past, according to BMO analyst Sohrab Movahedi. Only National Bank of Canada, the sixth-largest bank in Canada, was forced to issue a cut in 1993 when ratios hit 119 per cent.
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