The Growing Power of Dividends

Learn everything you need to know in '7 Winning Strategies for Dividend Investors' for FREE from The Successful Investor.

The Best Canadian Dividend Stocks to Buy: REITS Canada and other Top Canadian Dividend Stocks.

Topic: Dividend Stocks

Best Canadian Stocks: How we pick a best buy in Canadian banks

Stock Investing

Every Tuesday we bring you “Best Canadian Stocks.” You get our specific recommendations on the stocks we profile, with a full explanation of how we arrived at our opinion. You’ll read about stocks making moves you should know about, from coverage  in one of our three newsletters featuring Canadian stocks—The Successful Investor, Stock Pickers Digest and Canadian Wealth Advisor.

Bank of Nova Scotia is one of our top picks among Canada’s big five banks right now, due to its wide international exposure.

We believe Canada’s big banks are still well positioned to weather any downturn in the Canadian economy, contrary to pessimistic forecasts on the banks’ prospects from some in the business media. They trade at attractive multiples to earnings and continue to raise their dividends.

BANK OF NOVA SCOTIA (Toronto symbol BNS; reported that its earnings rose 2.6% in the quarter ended January 31, 2015, to $1.65 billion from $1.61 billion a year earlier. Per-share profits gained 2.3%, to $1.35 from $1.32, on more shares outstanding. Revenue rose 3.9%, to $5.9 billion from $5.6 billion.

Earnings at the Canadian banking division (which supplies 50% of total earnings) fell 1.7%, mainly because the bank sold most of its shares in mutual fund provider CI Financial (Toronto symbol CIX) in 2014.

Excluding CI and adjusting for changing tax rates, this division’s earnings rose 6% due to steady loan and deposit growth. Higher stock markets also increased the value of the assets its wealth management business administers.

Hidden value in plain sight

Corporate balance sheets sometimes fail to reflect some very valuable assets. In The Successful Investor Pat McKeough seeks out hidden value that brings spectacular gains where many others fail to look—in well-established dividend-paying stocks. Like the real estate assets whose value Loblaw and Canadian Tire unlocked when they spun them into a REIT.

Pat recently released the latest issue of The Successful Investor with updates on 18 stocks, including our two Best Buys among Canada’s big banks.You get all the details when you accept a special introductory subscription at a special reduced price. And you will immediately begin getting Pat’s weekly Hotline updates on stock making moves you should know about. Click here to begin your no-risk subscription right away.

Dividend stocks: 3.0% dividend hike produces a yield of 4.3%

The international division (25% of total earnings) saw its profits fall 1.9% on higher loan-loss provisions in Colombia and negative foreign exchange rates. However, earnings at the securities trading business (25%) rose 4.1% on higher stock and foreign exchange trading volumes.

Bank of Nova Scotia set aside $463 million to cover potential bad loans in the latest quarter, up 30.1% from $356 million a year earlier. That’s mainly because it’s loaning more funds to consumers in Canada and Latin America.

The bank also increased its dividend by 3.0%. The new annual rate of $2.72 a share yields 4.3%. The stock trades at 11.2 times the bank’s projected 2015 earnings of $5.65 a share.

Recommendation in The Successful Investor: buy.  


Tell Us What YOU Think

You must be logged in to post a comment.

Please be respectful with your comments and help us keep this an area that everyone can enjoy. If you believe a comment is abusive or otherwise violates our Terms of Use, please click here to report it to the administrator.