Bank of Nova Scotia (TSX:BNS) is one of Canada’s longest-paying dividend stocks that investors should consider buying before the start of 2024.
Overview of Bank of Nova Scotia
Bank of Nova Scotia, also known as Scotiabank, is one of the “Big Five” Canadian banks. It is among the largest financial institutions in the country in terms of assets under management, market capitalization, and revenue.
Scotiabank has a strong domestic presence in Canada but also a significant international footprint, especially in the Pacific Alliance region of Mexico, Peru, Chile, and Colombia. This international exposure provides growth opportunities beyond the Canadian market.
190 Years of Dividend Payments
One of the most impressive aspects of Bank of Nova Scotia is its dividend payment history. The company has paid shareholders a dividend since July 1, 1833 and has never missed a payment.
This means Scotiabank has maintained its dividend for an astonishing 190 straight years. Very few publicly traded companies, let alone banks, can claim such an extensive dividend history.
Through recessions, depressions, world wars, and other global crises, Scotiabank has continued rewarding shareholders with dividend income. This level of consistency is extremely rare and demonstrates the bank’s financial strength and commitment to dividends.
Attractive 6.4% Forward Dividend Yield
In addition to its dividend longevity, Bank of Nova Scotia offers an attractive forward dividend yield of 6.4%. This is significantly higher than the industry average of around 4% among Canada’s major banks.
Scotiabank’s stock price has pulled back in 2022, currently sitting below its all-time highs. This has pushed the dividend yield upwards, presenting an opportunity for income investors or those looking to initiate a position.
At today’s stock price, an investment in Scotiabank provides passive income of nearly 7% annually through dividends alone. The payout ratio is also sustainable, meaning there is room for future dividend increases as well.
Why Add Scotiabank Before 2024?
There are several reasons why investors should consider adding Bank of Nova Scotia to their portfolios before the end of 2023:
- Dividend longevity – The 190-year history of uninterrupted dividends is unmatched and demonstrates resilience. Scotiabank’s dividend should continue growing.
- High yield – A 6.4% yield is highly attractive in today’s low interest rate environment. Scotiabank offers substantial income.
- Undervalued stock – Shares trade below all-time highs, presenting an opportunity to buy at reasonable valuations.
- Growth opportunities – The international footprint provides expansion potential as emerging markets develop.
- Rising rates – Scotiabank is positioned to benefit from rising interest rates in 2024 through increased net interest margins.
- Inflation protection – Bank stocks offer an inflation hedge as rates rise. Scotiabank has pricing power to protect profit margins.
- Recession resilience – Large Canadian banks are defensive and tend to outperform during economic downturns.
Profile of Bank of Nova Scotia
Let’s take a closer look at the operations and financials of this dividend stalwart:
Diversified Financial Institution
- Scotiabank provides a fully diversified range of financial products and services.
- Personal, commercial, corporate, and investment banking and wealth management solutions.
- Also insurance, mutual funds, credit cards, mortgages, leasing, and more.
International Banking Focus
- Considerable operations across the Pacific Alliance.
- Serving over 25 million customers globally.
- International banking segment is a key growth driver.
Strong Financial Performance
- Q3 2023 earnings of $1.72 per share.
- Assets exceed $1.020 trillion.
- Efficiency ratio of 55.4%, down from previous quarters.
- Common Equity Tier 1 capital ratio of 11.4% – very solid capital position.
Commitment to Dividend Growth
- Dividend has grown at a 4% compound annual rate over the past decade.
- Payout ratio around 65% leaves room for ongoing increases.
- Scotiabank prioritizes returning capital to shareholders.
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Is Bank of Nova Scotia Stock a Buy Today?
Bank of Nova Scotia represents an excellent combination of dividend longevity, above-average yield, and growth potential. Investors seeking reliable passive income and inflation protection should give Scotiabank strong consideration, especially at today’s reasonable valuation.
The company is poised to benefit from rising interest rates while its diversified operations and international footprint provide stability. Scotiabank has been paying dividends for 190 straight years and has promising prospects ahead to extend that streak for decades to come.
For long-term investors, owning this high-quality Canadian dividend stock could provide superior total returns through ongoing dividend growth and capital appreciation over time.