National Bank of Canada (TSX:NA), the sixth-largest bank in Canada in terms of total assets, has watched its stock fall over 18% in 2015, but I think it is an absolute steal at just $40 today. Let’s take a closer look at three of the primary reasons why I think the stock will head higher from here and why you should be a long-term buyer of it today.

1. Its strong financial performance could support a much higher share price

On December 2, National Bank announced very strong earnings results for its fiscal year ended on October 31, 2015. Here’s a summary of 10 of the most notable statistics from fiscal 2015 compared with fiscal 2014:

  1. Adjusted net income increased 5.6% to $1.68 billion
  2. Adjusted earnings per share increased 4.9% to $4.70
  3. Total revenue on a taxable equivalent basis increased 6.1% to $5.98 billion
  4. Non-interest income increased 5.3% to $3.01 billion
  5. Net interest income increased 6.9% to $2.97 billion
  6. Total assets increased 5.2% to $216.09 billion
  7. Total deposits increased 7.5% to $128.83 billion
  8. Total loans and acceptances increased 8.5% to $115.24 billion
  9. Total assets under administration and management increased 3.7% to $358.14 billion
  10. Book value per share increased 9.7% to $28.26

2. Its stock trades at very inexpensive valuations

At today’s levels, National Bank’s stock trades at just 8.6 times fiscal 2015’s adjusted earnings per share of $4.70, only 8.5 times fiscal 2016’s estimated earnings per share of $4.76, and a mere 8 times fiscal 2017’s estimated earnings per share of $5.05, all of which are inexpensive compared with its five-year average price-to-earnings multiple of 10.1 and the industry average multiple of 12.9.

With the multiples above and its estimated 7.1% long-term earnings growth rate in mind, I think National Bank’s stock could consistently trade at a fair multiple of at least 10, which would place its shares upwards of $47 by the conclusion of fiscal 2016 and upwards of $50 by the conclusion of fiscal 2017, representing upside of more than 16% and 23%, respectively, from current levels.

3. It has a high and safe yield with an active streak of annual increases

National Bank pays a quarterly dividend of $0.54 per share, or $2.16 per share annually, which gives its stock a 5.35% yield, and this is more than double the industry average yield of 2.3%.

Investors should also make two very important notes. First, the company has increased its annual dividend payment for five consecutive years, and the 3.8% increase it announced on December 2 puts it on pace for 2016 to mark the sixth consecutive year with an increase. Second, it has a target dividend-payout ratio of 40-50% of net income, so its consistent growth should allow this streak to continue for the next several years.

Does National Bank of Canada belong in your portfolio?

National Bank of Canada is an absolute steal at just $40 per share, so all Foolish investors should strongly consider making it a core holding today.

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Fool contributor Joseph Solitro has no position in any stocks mentioned.