Wow, this buy is a little bit earlyer then I anticipated as my salary hasn’t arrived yet. Would come on the 24th but I just couldn’t withstand this sweet deal. As previously was mentioned, I had to put some money aside for my rescue fund and upcoming dentist costs, but that has not happened yet. Will do a few hundred aside as soon as the salary arrives the 24th.
The beginning of the month I didn’t have it on my mind to purchase stocks. Only thing I had in my mind was, what other stocks would fall together in line with the oil drop. And I found out that the Bank of Nova Scotia has the link, because the stock went all the way dropping from about
$62 towards $51 on the share price since 1.5 years.
With having that said this was my first buy and seeing this Canadian Bank stock falling so hard and being around since 1832. Furthermore the Bank of Nova Scotia has been paying dividends since 1833, and has increased its dividends in 42 of the last 45 years. Which is mighty impressive! The bank has survived the financial crash too and just kept on paying. I jumped aboard just before the 1,84% increase of share price.
I purchased 22 shares of The Bank of Nova Scotia (BNS) on 1/22/15 for $51.53 per share.
The Bank of Nova Scotia was incorporated by Legislative Assembly of Nova Scotia back in March 30th, 1832. The first president of the bank was William Lawson. BNS is a financial services company that focuses on retail, commercial, corporate and investment banking.
The company is the biggest international bank of Canada. Operating in Latin America, Asia, Europe practially everywhere.
Lately the BNS has really been beaten up by the market because of the oil, their international exposure to Europe is not going as far as we want to because of the falling euro currency. It really continues to weigh on operations there. In my opinion its a buying opportunity at this moment for BNS because its on its 52 weeks low and the future you will love it that u held it for the longterm. The company has good long term growth prospects with its 183 years of history.
Theres a good margin of safety on the stock that pays a very safe and consistent dividend which has returned a compounded annual rate of 9.9% over the last 10 years . Were talking about a 10% return. That’s good for a bank stock! The book value has been more then doubled over the last decade and the stock currently trades for 1.79 times book (again converted to US dollars) which is below its long term average. Some other statistics I’ve got are:
- ROE of 16.1% and an equity tier 1 ratio of 10.8% (for comparison, a bank has to have a 6% ratio to be considered “well capitalized” in the U.S) and total capital ratio of 13.9% pointing to the fact the bank is well prepared for any sort of financial crisis like what occurred just a few years ago.
- Net income is up 10.4% in 2014 to $C7,298 (millions) from $C6,610 in 2013.
- Total assets up 8.3% in 2014 to $C805,66 (millions) from $743,644
- Book value growth of 11.2% in 2014 to $C36.96 from $33.23 in 2013
- Diluted EPS up 10.7% in 2014 to $C5.66 from $C5.11 in 2013
Company is planning to grow its EPS between 5%-10% per year, which will result in many more increasing dividends to come.
As you can see in the image below taken from Morningstar the company’s income keeps on growing year after year.
The risks I see are definitively the upcoming housing bubble which could occur in the upcoming 2 years ahead of us. But the things that should get u some peace of mind is that its an INTERNATIONAL business and it SURVIVED the crash back in 2008 as it just kept on paying its dividend. The bank kept standing up compared to Goldmansachs, that bank had to be helped by the government. The current CEO and President Brian J. Porter is doing a terrific job on keeping the company healthy for years to come.
This particular stock is on the market with a P/E ratio of 10.10, which is alot lower than the S&P 500.
The yield is currently at 4.45% based on the CAD 0.66 quarterly dividend payout.I have valued the shares using a dividend discount model analysis with a 10% discount rate and an 7% long-term growth rate. The growth rate is more then the past 5 years of 5.86% . Factoring in 2 increases per year, low payout ratio of about 45%, and a good balance sheet. I value the shares at $60
I am not a professional investment advisor, I think BNS is worth considering in any dividend growth portfolio. I like the:
- Geographic and financial service diversity which helps them grow and mitigate risk while continuing to reward shareholders.
- Very Long history of paying and increasing dividends. Past 12 months it was raised 2 times.
- Growth prospects coming from Latin America. Europe will be on hold though..
Please do your own research before investing, but hopefully I have been able to offer a good snapshot into what I think is one of the better long term opportunities in the financial sector. In the end.. I think that all 5of the Canadian banks would be a cool addition to anyone’s dividend growth portfolio and it would be worth a look with this recent pullback we have here.
This purchase adds $49,94 to my annual dividend income, based on the current quarterly $0.66 dividend.
I’ll update my Portfolio in early February to reflect this recent purchase.
Full Disclosure: Long BNS.
What do you think of the canadian bank BNS here? Think it’s good value?
Thanks for reading up my post.
Are you joining the loyal3 or something king, I’m not sure. Some company will let you buy a bunch of stocks for $10 fee instead of buying small individual stock which can cost $4-10 per purchase? Fees was a big factor when I started out with $2000.
Thanks for commenting on my recent buy.
That are some huge fees you’re paying there compared to mine.
As I am living in Holland i’m able to use degiro.nl. It’s the lowest fees broker over here at the moment.
If I would be comparing it to the most well known broker binck.nl , is when things get really interesting as the difference takes a huge leap. Let me show you below :
€9,50 + 0,15% is what I would be paying if I was using binck.nl
€0,50 + 0.004USD with degiro.nl So lets make it short:
If I buy 27 stocks with a share price of $50 each using $1,350.-(+-. €1.200,-)
Then I would be paying for the whole transaction : €0,50 + 27(stocks)*0.004USD= 0.108 USD. What would be about €0,57 per transaction
Loyal3 isnt available over here in europe and as far as I know u cant buy the stocks any given time as its a groupbuy of multiple investors in line using that loyal3 program.
I really like all the large Canadian banks. In my portfolio I own three Canadian banks, TD, BNS and RY with BMO and CM on my watch list. For now I’ll be sticking with those three banks plus WFC in the U.S. The long dividend history of the this bank along with their relative conservative nature can make this a great long term hold. Thanks for sharing.
Hi Divhut, i picked a few shares of BMO too. I also have wfc and Bac on my prortfolio, and may add more.
That’s very low fee that you have to pay. I wish I was as savvy as you at your age. I was very shy and conservative. Growing up in the culture where invest in stock is viewed as gambling. It took me awhile to find the dividend route.
I think you’ll do so well in the future, just keep it up.
Yes indeed long history of TD its been founded since 1864. You cant go wrong with WFC aswell. I have to mention that WFC lowered the dividend during the crisis years BUT they made big jumps on the dividend thereafter. Not on the same level as before yet but its getting better. Thanks for commenting on my post Divhut
No More Waffles says
I’ve seen a lot of other DGI buying Canadian banks the last few months, BNS being the most popular among them. If it manages to continue its excellent history and growth rate, you’ll be looking back in a couple of years at a great purchase today.
Also, it’s interesting that one of your first purchases is a Canadian bank. Are you looking to add European stocks to your portfolio too?
NMW Hi there,
These upcoming years will be a bit rough for BNS,with the talks I been reading about the upcoming housing recession of Canada. As BNS is part of it as it is utilizing mortgages through all out Canada for people,I don’t think the growth in the whole Canada itself would be any good.But international business achievements will make up for the difference.
Personally i’m more interested in the international business they’re driving.
The whole world economy will start to grow sooner or later after all the headwinds the world has had. Even Jason from dividendmantra.com noted,that the stock been down for about 25% since the last 6 months.
That’s a nice bargain as I know this company will be growing sooner or later.
Isn’t it the dividends that have never ever been cut then its the share price.
Some may argue as I find it quite stable going up if u take out the moment it had of the recession back in 2009 when it hit a low of 21,31.
Since January 1995 we’ve had the share price of this stock at around 4,41
and when I checked the date of 23rd of January it was on 51,40
It has been doubled to more then ten times in a period of 20 years.
I have BBL and Unilever on my watchlist right now. I do not have spendable cash for investing yet but I like this DGI strategy. So expect alot more purchases of quality dividend growth stock purchases throughout the year.
Will try to purchase at least 1 stock per month, as long as I don’t get unexpected bills that lower my spendable money for stocks.
Thanks for dropping by my on my website!
What’s your forecast on the metal companies? What’s will be the impact on US banks when the Greece-Germany talk collapse? Cascade effect with Spain and Portugal?
Hi Vivianne, I’m not that familiar with the US banks yet. But expect to see some reaction in the share prices.
Metal companies will still be favorable for long term holders, but the short term is not looking that bright. Might want to check out this link