Another purchase in my portfolio to close out this quarter. I added to my position in Bank of Nova Scotia (BNS.TO) with 20 shares @ C$65.65. The stock yields 4.15% adding C$54.40 to my annual dividend income.
Recent Buy Decision
- Bank of Nova Scotia is the third largest financial institution in Canada – one of the oldest and most prestigious banks, which has rewarded shareholders extremely well through the decades.
- BNS has the second longest dividend payment streak in Canadian corporate history – without a single miss in dividends since 1832!
- BNS is the most international of the Canadian banks – with exposure in 55 countries outside Canada. More recently, the bank shed some assets/jobs in South America and has been expanding in Mexico – buying operations from Citigroup, and also in talks to buy operations from HSBC.
- The Canadian financial sector has been under pressure due to the energy market turmoils facing the economy. While this effected the oil, gas and rest of the commodity markets – which has a heavy weighting in the Canadian market, the financials also suffered. Bank of Nova Scotia (and other Canadian banks) have traded sideways through the year – and as I mentioned in this post from Feb 2015, the pressure through 2015 should provide decent investment opportunities and recommended investors to keep adding shares as the long term prospects of these banks are undeniably bright.
- My full dividend stock analysis (from Oct 2014) can be found here. BNS is still one of the most undervalued companies in the Canadian banking sector.
- The Canadian economy facing a recession after the oil rout saw the Bank of Canada pre-emptively cut the interest rates in Jan 2015. The headwinds still exist for the Canadian economy, although the central and eastern provinces have taken up the slack from Alberta.
- There has been talk of a Canadian housing bubble for a few quarters now, with Canadian borrowers tapped out at a 163% debt-to-income ratio. If the bubble bursts, Canada and the banking sector will face more problems.
- BNS faces challenges in the emerging markets, and the bank has had to shut down operations and cut jobs to cope with the issues.
- Bank of Nova Scotia Fact Sheet Q2 2015
- Bank of Nova Scotia 2014 Annual Report
- See my list of other recent purchases
Full Disclosure: Long BNS. My full list of holdings is available here.