The immediate market reaction to another stellar quarter of financial and operating results for Canada’s Big Six banks was generally negative, with four of them suffering appreciable share-price declines the day they revealed fiscal 2014 third-quarter numbers.

It’s a matter of Bank of Montreal (TSX: BMO, NYSE: BMO), Bank of Nova Scotia (TSX: BNS, NYSE: BNS), Canadian Imperial Bank of Commerce (TSX: CM, NYSE: CM), National Bank of Canada (TSX: NA, OTC: NTIOF), Royal Bank of Canada (TSX: RY, NYSE: RY) and Toronto-Dominion Bank (TSX: TD, NYSE: TD) beating expectations…but not by enough to satisfy ever-harder-to-please investors.

Canada’s banks–reputed to be among the safest, most stable financial institutions in the world–have also established a remarkable track record of exceeding analysts’ earnings forecasts. It’s now a matter of course when one, several and all of them do so in a given quarter.

So the short term may in many cases be unfairly unkind. But performance for the three months ended July 31, 2014, provides additional reason to believe in Canada’s Big Six for long-term dividend growth.

The Biggest Loser

Despite the fact that it raised its dividend by 3.1 percent CE favorite and Conservative Holding Scotiabank suffered through a 2.3 percent mini-selloff the day it reported. That made it the worst post-earnings performer among the Big Six, consistent with the fact that Scotiabank lags its peers in year-to-date total return as well.

CIBC shed 2.2 percent the day of its announcement, RBC 1.1 percent and TD 0.6 percent. RBC joined Scotiabank by raising its dividend 5.6 percent.

BMO and National Bank proved exceptions to the general rule, rising a modest 0.1 percent and an impressive 3.1 percent, respectively. BMO and National Bank have in fact pushed out to 52-week highs this week.

Our preference for Scotiabank is based on the fact that it’s the “most international” of the Big Six, with the greatest share of revenue and earnings derived from overseas markets.

The Conservative Holding has significant exposure to the Caribbean, Latin America and Southeast Asia, which hasn’t necessarily been an advantage in recent months due to weakness afflicting emerging market economies.

Scotiabank’s domestic franchise is a solid foundation for its international ambitions, which we believe will be rewarded with outsized growth as middle class consumers in emerging markets continue to develop.

Scotiabank, Canada’s third-largest lender by assets, reported fiscal 2014 third-quarter earnings of CAD2.35 billion, or CAD1.85 per share, up from CAD1.75 billion, or CAD1.36 per share, for the prior corresponding period.

The sale of most of its stake in CI Financial Corp (TSX: CIX, OTC: CIFAF) generated a profit of CAD555 million, or CAD0.45 per share.

Adjusted earnings per share (EPS) were CAD1.40, up from CAD1.29 a year ago.

Scotiabank will pay a dividend of CAD0.66 per share, up from CAD0.64 last quarter and CAD0.62 a year ago, on Oct. 29, 2014, to shareholders of record as of Oct. 7. Shares will trade ex-dividend as of Oct. 3.

In addition to the CI Financial contribution, earnings were helped by solid contributions from all business segments.

Domestic banking earnings were up 2.7 percent to CAD565 million from CAD550 million a year ago, boosted by higher net interest margin as well as growth in credit cards, auto lending and fee revenues.

International banking posted earnings of CAD410 million, down 16.3 percent from CAD490 million a year ago due to weaker results from its Caribbean and Central American operations, partially offset by improved numbers from Latin America and Asia.

Global wealth and insurance recorded a profit of CAD846 million, up from CAD310 million on the CI Financial sale as well as strong wealth sales.

Global banking and markets profit was up 7.9 percent to CAD408 million.

Scotiabank’s Basel III Common Equity Tier 1 Capital Ratio as of July 31, 2014, was 10.9 percent.

Recent market performance–including an 8.9 percent US dollar total return in 2014–has paled relative to its peers and the broader market. But Scotiabank has been a consistent and substantial dividend grower in the aftermath of the Great Financial Crisis/Global Recession, with a total of seven increases since March 2011.

The current quarterly dividend rate of CAD0.66 is up 34.7 percent from the CAD0.49 it paid from July 2008 through January 2011.

Scotiabank has settled into a pattern of announcing dividend increases along with first-quarter and third-quarter results, or two times a year.

Bank of Nova Scotia, based on the 3.1 percent dividend increase, is now a buy under USD69.

More Dividend Growth

Like Scotiabank, Royal Bank of Canada boosted its quarterly dividend during the recent round of earnings reporting, by 5.6 percent to CAD0.75 per share.

RBC has also raised its payout seven times since the end of the GFC/GR, with overall growth of 50 percent from CAD0.50 as of May 2011 to the current rate. It too has a regular habit of announcing dividend increases along with first- and third-quarter results.

RBC’s solid Canadian franchise is complemented by a significant presence in the US as well as international operations.

Management reported fiscal 2014 third-quarter net income of CAD2.38 billion, up 4.1 percent compared to the prior corresponding period.

Adjusted net income was CAD2.42, or CAD1.62 per share, versus CAD2.19 million, or CAD1.46 per share, a year ago.

Management noted record earnings in Canadian Banking, Capital Markets, Wealth Management and Insurance as well as solid results in Investor & Treasury Services.

Personal & Commercial Banking net income was CAD1.14 billion, down from CAD1.17 billion a year ago. Canadian Banking net income was CAD1.19 million, up 3 percent year over year on volume growth and higher fee-based revenue, primarily from mutual fund sales. These factors were partially offset by higher provisions for credit losses (PCL).

Wealth Management net income was up 22 percent to a record CAD285 million, mainly due to higher average fee-based client assets across all businesses resulting from capital appreciation and net sales.

Insurance net income was up 34 percent to CAD214 million, on favorable actuarial adjustments Investor & Treasury Services net income was up 6 percent to CAD110 million, reflecting higher funding and liquidity revenue from tightening credit spreads and increased net interest income from growth in client deposits.

Capital Markets net income was up 66 percent to CAD641 million, as trading and origination activity was robust, driven by stronger equity and debt markets and increased activity.

RBC’s Basel III Common Equity Tier 1 Capital Ratio as of July 31, 2014, was 9.5 percent.

Royal Bank of Canada remains a hold.

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The primary distinguishing characteristic for Toronto-Dominion is the extent of its US exposure relative to its Big Six peers. The second-largest of Canada’s major banks derives a greater share of revenue from the US than any other Canadian bank.

With economic growth south of the border setting the pace in North America, TD’s US operations provide a meaningful competitive advantage.

TD reported fiscal 2014 third-quarter net income of CAD2.11 billion, up from CAD1.52 billion a year ago. Earnings per share were CAD1.11, up from CAD0.79 per share.

Adjusted net income was CAD2.17 billion, up from CAD1.58 billion a year ago, as adjusted EPS were CAD1.15 versus CAD0.82.

Canadian Retail delivered adjusted net income of CAD1.4 billion, a 54 percent year-over-year increase driven by good loan and deposit growth, good credit quality, a solid contribution from Aeroplan, higher wealth assets and strong operating leverage.

US Retail generated net income of USD518 million, an increase of 4 percent from the prior corresponding period on strong organic growth, expense management and improved asset quality, partially offset by lower gains on sales of securities.

TD Ameritrade contributed USD69 million in earnings to the segment, an increase of 1 percent compared with the third quarter last year.

Wholesale Banking net income for the quarter was CAD216 million, an increase of 46 percent. Growth was driven by broad-based revenue growth across core businesses and favorable credit quality, partially offset by higher non-interest expenses.

Like Scotiabank and RBC, Toronto-Dominion has an impressive track record of dividend growth over the past three years, with eight increases and an aggregate increase of 54.1 percent from CAD0.305 to CAD0.47 in its quarterly dividend rate.

TD’s Basel III Common Equity Tier 1 Capital Ratio as of July 31, 2014, was 9.3 percent.

Toronto-Dominion Bank is now a buy under USD58.

The Final Three

All told, the Big Six have combined to announce 38 dividend increases since the end of the Great Financial Crisis/Global Recession, beginning with National Bank of Canada’s declaration in November 2010 through Scotiabank’s and RBC’s last month.

National Bank, the smallest and most recent inductee into a set recently known as the Big Five, is concentrated almost entirely in Canada. It has branches in most Canadian provinces but is the largest bank in Quebec. It’s announced seven dividend increases over the past three-plus years.

Fiscal 2014 third-quarter adjusted net income was up 14.2 percent to CAD427 million, while adjusted EPS grew by 12.1 percent to CAD1.20 on strong Wealth Management and Financial Markets results.

National Bank’s Basel III Common Equity Tier 1 Ratio as of July 31, 2014, was 9.1 percent. National Bank of Canada is a buy under USD48.

Bank of Montreal dramatically expanded its US presence in December 2010 with the acquisition of Milwaukee-based Marshall & Ilsley Corp, which operated as M&I Bank. M&I was Wisconsin’s largest and oldest bank, with branches in the Badger State, Minnesota, Missouri, Kansas, Arizona and the Indianapolis market.

When the transaction completed, M&I, along with Harris Bank branches were rebranded BMO Harris Bank.

The Midwest has been one of the strongest regions for economic growth in the US in recent years, helping BMO’s overall results.

BMO reported fiscal 2014 third-quarter adjusted net income grew by 4 percent to CAD1.16 billion, as adjusted EPS were up 4 percent to CAD1.73 on solid Canadian Personal & Commercial results.

Bank of Montreal has been the least aggressive dividend-grower among the Big Six, with four increases since August 2012. But accelerating growth in the US, supported by a solid domestic franchise, should pave the way for continuing growth going forward.

BMO’s Basel III Common Equity Tier 1 Ratio as of July 31, 2014, was 9.6 percent.

Bank of Montreal is a buy under USD70.

Canadian Imperial Bank of Commerce, like Bank of Montreal, has been relatively conservative when it comes to payout growth, with five increases since August 2011.

Its primary international exposure is in the Caribbean, which has been problematic of late. Although the initial market reaction to its fiscal 2014 third-quarter earnings announcement was negative–the shares dipped 2.2 percent the day results were revealed–CIBC has recovered nicely and now trades above its pre-announcement closing price.

Management reported a 2.5 percent decline in adjusted net income to CAD908 million, as adjusted EPS were off 1.3 percent to CAD2.23, largely on weakness in its international segment.

CIBC’s Basel III Common Equity Tier 1 Ratio as of July 31, 2014, was 10.1 percent.