3 Elite Canadian Banks For Dividends: Bank Of Nova Scotia (Part 2 Of 3)

<< Read More: 3 Elite Canadian Banks for Dividends: Royal Bank of Canada (Part 1 of 3)

Written by Dirk S. Leach

It is difficult to find safe investments with 3%+ dividend yields and solid growth prospects.

Many equities today are priced on the rich side of valuations resulting in lowered dividend yields.Low interest rates have made bonds a poor value for income seeking investors.

The benefits of investing in high quality stocks with above average yields and good growth prospects – trading at fair or better prices – are well-known to long-term investors.

What if you could quickly identify an entire group of these stocks?This article takes a look at one such group the market is overlooking:

The Canadian banking sector.

There are 3 large Canadian banks that rank as a in the Top 30 high quality dividend stocks using The 8 Rules of Dividend Investing.

This article gives an overview of the favorable investment prospects of the Canadian banking system.It also analyzes 1 of the 3 highly ranked Canadian Banks in detail:Bank of Nova Scotia (BNS).

Why Canadian Banks ?

With all the banking names in the United States, why focus on Canadian banks for potential investments?

The short answer is that the Canadian banking system is recognized as number 1 in the world for financial strength and safety, has a significantly smaller fraction of non-performing loans than their EU and US peers, and Canadian banks have historically paid outsized dividends compared to their US counterparts.

I covered these attributes of Canadian banks in greater detail in the first article of this series.

In addition, while Canada is not the US, it is also not all that different in its business culture, laws, regulations, and values.

Narrowing the Field

In the first article, I screened the 5 largest Canadian banks looking at 10 year compound annual growth rates for revenue, EBITDA, EPS, dividends paid, and the most recent dividend payout ratio.

That list of 5 includes:

  • The Bank of Montreal (BMO)
  • The Bank of Nova Scotia (BNS)
  • Canadian Imperial Bank of Commerce (CM)
  • The Royal Bank of Canada (RY)
  • Toronto Dominion Bank (TD)

The summary of the screening data is provided in the table below.

Top 5 Canadian Banks

Source: Author

Based on that screening, I selected BNS, RY, and TD for more detailed analysis.I covered RY in detail in the first article.

Today, I’ll cover BNS in additional detail and plan to cover TD in the final article of the series.

Bank of Nova Scotia

BNS is Canada’s third largest bank by assets with a market capitalization of $63B in US dollars. BNS has the largest international exposure of the big five Canadian banks with offices in the United States, Mexico, Latin America, the Caribbean and Central America, and Asia-Pacific with more than 23 million customers worldwide.

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Disclosure: None.

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