Well, after 2 weeks of strong market selloff in the market I couldn’t pass these great buying opportunities of dividend stocks that are on my watch list. I love the short term declining volatility as I am confident that the overall market will eventually recover and be better. With that being said, I’d like to share my recent stock purchase. I have added 50 shares of Bank of Nova Scotia (BNS) at $61.50 on January 19 2015 for a total investment of $3,075 (It is currently at $63.78 today Yay!)
Bank of Nova Scotia is one of the most diversified banks in Canada. It has four main divisions and they are Canadian banking service, International banking service, Global wealth management service and Scotia capital service. Bank of Nova Scotia acquired various companies recently including Aurion Capital Management and Cencosud S.A which made them to reach 18.5 million customers around the world. Let’s take a look through the details and you will understand why I as a long term passive dividend income investor think Bank of Nova Scotia is a strong contender.
Strength
1. Very well diversified geographically provides a great hedge against weakness in Canada as opposed to Canadian major banks such as TD, RBC, CIBC, BMO
2. The growth in Latin America is attractive
3. Dividend yield of whooping 4% at current market price
4. Increased its dividend by 35% in the past 4 years
5. Payout ratio of 45% is close to industry norm
6. Planning to grow EPS between 5%- 10% per year which means higher dividend in the future.
7. Lower than 11 on P/E ratio is very appealing. The lowest among Canadian big 5 banks.
Weakness
1. Made several bad investments in Venezuela and Caribbean and closed which costs total of $450 million or higher however the bank will close about 130 international branches which will lead to cost savings about $120 million or higher per year going forward.
2. The stock is in a downward trend and Canadian major banks consider 2015 to be a tough year to grow.
3. About 15-20% of the Bank of Nova Scotia’s residential mortgages are tied to Alberta which is going through a recession due to declining oil price. It is likely to face higher defaults in mortgage payments.
I think Bank of Nova Scotia is an excellent stock to buy and forget if you are a long term investor. With its relatively new CEO Brian Porter made several significant changes in his senior management team including Latin America operation, wealth management team, marketing head, chief operating officer within really short time frame indicates that the CEO is determined to turnaround already attractive company. Well. I am in!
My purchase will add $132 to my annual dividend
What do you think about my purchase? Do you have more appealing stocks on your watch list?
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Great pick and looks like you are doing pretty well so far!
Yeah. Scotiabank is a solid dividend paying company and I am confident that it will serve me well for a long time.
Great buy, looks like you got some shares before the recent jump.
Thanks for the comment Tawcan and Yeah lucky timing just before prime rate reduction by 0.25%
I have some TD and RBC but BNS. I will add some BNS to TFSA soon.
I think BNS is a great dividend company to add just like TD and RBC. Thanks for coming!
Nice work. Love BNS as a holding.
Mark
Thanks for coming Mark. I don’t think I can go wrong with Canadian Big 5 banks. BNS looked undervalued compared to the others when I had the cash to invest.
Cheers!
BeSmartRich
Thanks for sharing your BNS purchase. I have added to my Canadian banks in January as well with some TD. Looking forward the three major Canadian banks are on my short list with RY, TD and BNS my top picks. There’s no question about the headwinds the Canadian banks are feeling now. Seems like a good time to nibble on some good valuation and higher yielding stocks.
RY, TD and BNS they are all excellent Canadian Banks Stocks. Reliable strong management with tight rules and regulation make them one of the must have stocks when looking for solid dividend income. They have been beaten up lately which makes the perfect opportunity for us to jump in. Thanks for your comments, DivHut.
Cheers,
BeSmartRich
BNS is a good stock that is undervalued currently. BNS is on my watchlist and I think it will do very well as it always has been.
I totally agree. They will do awesome as they always have been.
Thanks for coming Tom!
I have BNS but it hasn’t been performing well for last year. Still happy that received dividend!
That’s the key of dividend investing. Regardless of capital appreciation, we still get paid! Thanks for stopping by JulieH