National Bank of Canada (OTCMKTS: NTIOF) and Lloyds Banking Group (NYSE:LYG) are both large-cap finance companies, but which is the better business? We will compare the two companies based on the strength of their analyst recommendations, risk, earnings, profitability, dividends, valuation and institutional ownership.
National Bank of Canada pays an annual dividend of $1.89 per share and has a dividend yield of 4.0%. Lloyds Banking Group pays an annual dividend of $0.14 per share and has a dividend yield of 3.8%. National Bank of Canada pays out 44.4% of its earnings in the form of a dividend. Lloyds Banking Group pays out 66.7% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. National Bank of Canada has increased its dividend for 2 consecutive years. National Bank of Canada is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
0.1% of National Bank of Canada shares are owned by institutional investors. Comparatively, 2.4% of Lloyds Banking Group shares are owned by institutional investors. 0.0% of Lloyds Banking Group shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.
Volatility and Risk
National Bank of Canada has a beta of 1.33, indicating that its share price is 33% more volatile than the S&P 500. Comparatively, Lloyds Banking Group has a beta of 0.81, indicating that its share price is 19% less volatile than the S&P 500.
This table compares National Bank of Canada and Lloyds Banking Group’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|National Bank of Canada||21.22%||18.93%||0.88%|
|Lloyds Banking Group||12.81%||19.07%||1.15%|
Earnings and Valuation
This table compares National Bank of Canada and Lloyds Banking Group’s top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|National Bank of Canada||$6.85 billion||2.35||$1.48 billion||$4.26||11.09|
|Lloyds Banking Group||$50.67 billion||1.31||$4.91 billion||$0.21||17.52|
Lloyds Banking Group has higher revenue and earnings than National Bank of Canada. National Bank of Canada is trading at a lower price-to-earnings ratio than Lloyds Banking Group, indicating that it is currently the more affordable of the two stocks.
This is a breakdown of recent ratings and price targets for National Bank of Canada and Lloyds Banking Group, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|National Bank of Canada||0||1||1||0||2.50|
|Lloyds Banking Group||5||3||3||0||1.82|
About National Bank of Canada
National Bank of Canada (the Bank) is an integrated group, which provides financial services to consumers, small- and medium-sized enterprises (SMEs) and large corporations in its domestic market and also offers specialized services internationally. The Bank’s segments are Personal and Commercial, which includes the banking, financing and investing services offered to individuals and businesses, as well as insurance operations; Wealth Management, which consists of investment solutions, trust services, banking services, lending services and other wealth management solutions offered through internal and third-party distribution networks; Financial Markets, which includes banking services, investment banking services and financial solutions for institutional clients, and Other, which includes treasury operations, including the Bank’s asset and liability management, liquidity management and funding operations; certain non-recurring items, and the unallocated portion of corporate units.
About Lloyds Banking Group
Lloyds Banking Group plc is a provider of financial services to individual and business customers in the United Kingdom. The Company’s main business activities are retail and commercial banking, general insurance, and long-term savings, protection and investment. The Company’s segments are Retail, Commercial Banking, Consumer Finance, Insurance and Other. The Retail segment offers a range of financial service products, including current accounts, savings and mortgages. The Commercial Banking segment offers a range of products and services, such as lending, transactional banking, working capital management, risk management and debt capital markets services. The Consumer Finance segment offers consumer lending products, including motor finance, credit cards, and unsecured personal loans. The Insurance segment provides a range of protection, pension and investment products. Its brands include Lloyds Bank, Halifax, Bank of Scotland, Scottish Widows, Colleys, Lex Autolease and AMC.
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