I just purchased Bank of Nova Scotia (Scotiabank) (TSE: BNS) yesterday (23 shares at $65.55), and it’s my first purchase since I started this blog… So I’ll just go ahead and explain to you why I bought BNS.
I’ve been looking at it for the better part of a month now, and it’s been making great gains (3% in the past one month). While it would have been great to have invested at the time I considered it, it doesn’t make a huge difference here since I’m after it’s great dividend. Not to mention, this is my first big blue-chip company; one of the big 5 Canadian Banks. I’m finally making a move away from my beloved REITs for some diversification. I’m starting to believe that Canada will be more bullish than the US market will be this year. My Vanguard Total Stack Market ETF has been dropping while all of my Canadian stocks are rallying (I’m looking for a good exit point before interest rates rise in the US). The reason I bought BNS aside from all the technical aspects, and it’s fantastic dividend growth and potential is that the Bank of Canada announced that it will not be changing interest rates this quarter due to Canada’s stalled economy because of falling oil prices. There was even talk of it potentially being reduced a couple more times before the end of the year, which would really boost the Canadian economy, and drive Canadian stocks higher.
BNS is currently sitting at a P/E of 11.53, the lowest of the 5 banks and a dividend yield of 4.14%, falling only slightly below CIBC (TSE:CM)’s dividend of 4.4%. It has a 52-week low of $60.75 and 52-week high of $74.94, having bought at $65.55, there’s definitely room for it to grow. Capital gains are well and all, but over here at Dividend Beginner, we’re obviously interested in the dividends… You’ll hear me say this a lot. And BNS is a solid blue-chip Canadian bank, so as far as I can see, things are pretty safe.
Since 2011, BNS has been raising their dividends every two quarters. Back in 2010, the annual dividend was $1.96 per share and has grown to $2.72 which is an annual growth of 8.54%. Imagine that… Getting an 8.5% raise every year for not doing anything on all your shares of BNS. That’s what I like to call putting your money to work. Once you start that, there’s no going back. These shares of BNS will add $62.56 to my yearly dividends at their current yield, and will go up and up and up from there.
If not for BNS I would have invested in either CIBC (TSE:CM) or RBC (TSE:RY), so those are also some nice Canadian bank stocks to research and analyze, but I’m happy with BNS and will be holding onto these shares for a very long time. I’m glad to have finally invested in a blue chip company; off to a good start here.