Consider The Bank of Nova Scotia and Manulife Financial Corp. for Consistent Long-Term Returns

The Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) and Manulife Financial Corp. (TSX:MFC)(NYSE:MFC) are in essential industries that offer steady returns.

| More on:

Despite market and sector challenges I believe the following two companies will provide consistent future returns to conservative income investors.

1. The Bank of Nova Scotia

I hold stocks in several Canadian banks because I believe they are among the most fundamentally sound in the world. The 2008 financial crisis proved this to me. That’s why I believe serious income investors should consider The Bank of Nova Scotia (TSX: BNS)(NYSE: BNS) and other major Canadian banks.

The Bank of Nova Scotia operates in more than 55 countries and has more than 21 million customers. This gives it geographic diversity. A particular big downturn in one nation’s economy won’t hurt the bank’s overall earning and profits, as the other markets are a hedge against this. As at April 30, 2014, The Bank of Nova Scotia had assets of $792 billion.

Two reasons I suggest The Bank of Nova Scotia as a worthy stock are its four diversified growth operations and its dividend payments. Its Canadian Banking division was responsible for 33% of Q2 2014 net income. Its International Banking was responsible for 24%, Global Banking & Markets was responsible for 23%, and Global Wealth & Insurance was responsible for 20%. This to me is a significant representation of diversity of operations, not relying solely on one division, and with good percentages spread out across these four platforms.

The Bank of Nova Scotia’s dividend yield is 3.50% and its five-year average dividend yield is 3.80%. Its dividend rate is $2.56.

2. Manulife Financial Corp.

I’m personally considering buying Manulife Financial Corp. (TSX: MFC) (NYSE: MFC) for two major reasons. First it operates globally, and is therefore diversified across its operations. The company’s main operations are in Canada, the U.S., and Asia and Manulife is one of the largest life insurance companies worldwide.

A growing portion of its revenues comes from its Asian operations. The company is one of the world’s leading financial services groups with a pan-Asia presence. Manulife has been doing business in Asia since 1897.

Second, to have a life insurance component to my portfolio, I only consider dividend payers. Manulife did cut its dividend during the financial crisis, However, John Stephenson, former manager of the First Asset Canadian Dividend Opportunity Fund, believes Manulife may begin increasing its dividends sometime in the next few quarters. He recently said to the Globe and Mail, “The environment is working much better for them.”

Manulife Financial’s earnings have increased along with rising stock markets. For example, the company’s Q1 2014 Asia Division insurance sales were US$258 million. This represents an increase of 23% versus Q1 2013.

Manulife Financial’s dividend yield is 2.40% and its five-year average dividend yield is 3.40%. Its dividend rate is $0.52. Manulife will release its Q2 2014 financial results on Thursday, August 7, 2014.

Consider these two stocks as additions to your portfolio as each company has the fundamental strengths to drive growth.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Michael Ugulini owns shares of The Bank of Nova Scotia.

More on Investing

Oil pumps against sunset

Oil or Tech? Why Choose When You Can Get Both in a Single Stock?

Tech stock Pason Systems (TSX:PSI) is exposed to the energy market boom.

Read more »

A red umbrella stands higher than a crowd of black umbrellas.

Protect Against Inflation With 2 Top TSX Stocks

Here are two top TSX stocks that long-term investors concerned about inflation may want to consider in this time of…

Read more »

Woman has an idea
Tech Stocks

The Smartest Stocks to Buy With $20 Right Now and Hold Forever

These under-$20 stocks have the potential to grow further with time and deliver solid capital gains.

Read more »

A close up image of Canadian $20 Dollar bills
Dividend Stocks

TFSA Investors: Put $45,000 in These Top TSX Stocks and Watch Your Passive Income Roll In

Are you looking to retire early? Here are a few ideas about how your TFSA could earn a passive-income stream…

Read more »

Human Hand Placing A Coin On Increasing Coin Stacks In Front Of House
Dividend Stocks

Love Passive Income? Here’s How to Make Plenty of it as a Real Estate Investor

You could definitely create passive income by investing in pure real estate, but you could make just as much, if…

Read more »

Make a choice, path to success, sign
Dividend Stocks

2 High-Yielding Dividend Stocks You Can Buy and Hold for Years

These two high-yielding dividend stocks can be the perfect addition to your portfolio, as the bear market causes payout yields…

Read more »

A worker uses a laptop inside a restaurant.
Tech Stocks

Why Investors Shouldn’t Give Up on Shopify Just Yet

Here's why long-term investors may not want to throw in the towel just yet on e-commerce juggernaut Shopify (TSX:SHOP).

Read more »

Retirees sip their morning coffee outside.
Dividend Stocks

TFSA Wealth: How to Turn $88,000 Into $1 Million for Retirement

Canadians can use the TFSA to hold a basket of diversified equity investments, allowing you to turn a $88,000 investment…

Read more »