Bank of Nova Scotia. Before I get into it, I just want to say how thankful I am for technology. I’m on an airplane from the east coast to San Francisco, traveling over 600MPH at an altitude 38,000 feet. This alone is awesome, but I also booked a vacation, paid some bills, bought some stock, and now I’m writing this blog post. I’m so happy I wasn’t born 100 years ago! The market has killed financial companies lately. Last week, I made two purchases in this sector. The first buy was Principal Financial Group, and the other was the Bank of Nova Scotia, commonly know as Scotiabank, (NYSE: BNS). I bought 50 shares at $35.50 per share, totaling $1,783.95. This buy will add $101 dollars to my annual dividend income.
An Overview of the Bank of Nova Scotia
The Bank of Nova Scotia (the Bank) is a Canada-based diversified financial institution. The Bank offered a range of products and services, including retail, commercial, corporate and investment banking to more than 21 million customers in more than 55 countries around the world. The Bank has four business lines: Canadian Banking, International Banking, Scotia Capital and Global Wealth Management. The Canadian Banking segment provided a range of banking and investing services to more than 7.7 million customers across Canada, through a network of 1,190 branches, 3,869 automated banking machine (ABMs), as well as telephone, Internet banking and third-party channels. International Banking includes Scotiabank’s retail and commercial banking operations in more than 55 countries outside Canada. Global Wealth Management (GWM) consists of wealth management insurance and Global Transaction Banking businesses. Source: Schwab.com
Bank of Nova Scotia Dividends
- Annual Dividend Yield of 5.04%
- Annual Dividend Rate (IAD) $2.02
- Payout Ratio (TTM) of 47.69%
- Dividend Coverage Ratio (TTM) of 209.70%
- 3 Year Dividend Growth Rate of 7.5%
Is The Bank of Nova Scotia Stock Fairly Priced
The F.A.S.T Graph below shows that the Bank of Nova Scotia is well below the orange and blue lines. For those of you unfamiliar with this tool, when the black line falls below the orange line this indicates a stock is trading below the market standard P/E Ratio of 15. If the black line falls below the blue line this indicates a stock is undervalued and is trading below its normal P/E Ratio.
Morningstar ranks Bank of Nova Scotia as 4-stars, a buy, with a fair share price estimate of $58.
S&P Capital IQ ranks Bank of Nova Scotia as 4-stars, a buy, with a fair price of $48.50.
Based on F.A.S.T Graph and analyst opinion, it is safe to say that Bank of Nova Scotia stock is currently undervalued.
Canadian banks have a long history of paying dividends and the Bank of Nova Scotia is no different, having paid dividends for over 100 years. I believe Bank of Nova Scotia stock is a great buy and hold stock especially at its current valuation. This latest stock buy takes my BNS share total two 65 shares. I’ll continue buying BNS stock on the dip until I reach at least 100 shares so I can sell covered calls.
What is your opinion of the Bank of Nova Scotia?
Full Disclosure: Long BNS