Buy Bank of Nova Scotia (TSX:BNS) Right Now

Canada’s big banks make great investment options in any market, but right now investors should look to buy Bank of Nova Scotia (TSX:BNS)(NYSE:BNS).

| More on:
analyze data

Image source: Getty Images

Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) is neither the largest nor the most well known of Canada’s big banks. It is, however, an intriguing investment option whose appeal has only grown since the onset of the COVID-19 pandemic. Here’s a look at what differentiates the bank from its peers and why you should buy Bank of Nova Scotia right now.

An alternative to the big banks?

At first glance, the big banks are different flavours of the same product. All of the big banks provide impressive coverage across Canada, continue to churn out handsome gains, and offer impressive dividends. In a similar vein, the banks also provide some diversification outside the Canadian market, but this is where the Bank of Nova Scotia differs from its peers.

Instead of focusing its international presence in the U.S. market, Bank of Nova Scotia chose to invest heavily in Latin America. Specifically, the bank chose the countries of Chile, Columbia, Peru, and Mexico. These four nations are parties to a trade agreement known as the Pacific Alliance. The Alliance is charged with increasing trade and reducing tariffs between its members. By establishing a solid presence in these nations, Bank of Nova Scotia has become the preferred lender across the bloc, leading to solid gains in its international segment.

This has provided the bank with a superb level of diversification outside of Canada that far outweighs its peers.

Unfortunately, Latin America was hit hard during the COVID-19 pandemic, which resulted in the Bank of Nova Scotia posting dismal results. Specifically, in the most recent quarter, the bank reported earnings of $1,304 million, or $1.04 per diluted share. By way of comparison, in the same period last year, the bank reported earnings of $1,984 million, or $1.50 per diluted share. The international segment in particular saw net income attributable to equity holders drop a whopping 96%.

So, where exactly is that opportunity?

An opportunity for long-term growth and income

So far in 2020, Bank of Nova Scotia remains down over 20%. This pales in comparison to the performance of some of the bank’s Big Five peers, which are down just 4-6% this year. So, where exactly does that opportunity lie?

Bank of Nova Scotia will recover, as will the rest of the market. The difference with Bank of Nova Scotia is that potential investors can buy in at a discounted rate today and ride the stock back up to where it should be. In the interim, investors will also benefit from something else that Bank of Nova Scotia offers — an attractive dividend.

Bank of Nova Scotia currently offers a quarterly distribution of $0.90 per share. Given the drop in share price in recent months, the dividend works out to an insane 6.38% yield. This not only exceeds the yield of its peers but also screams growth potential when you factor in dividend reinvestments.

In short, buy Bank of Nova Scotia now and hold it forever.

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 Demetris Afxentiou owns shares of The Bank of Nova Scotia. The Motley Fool recommends BANK OF NOVA SCOTIA.

More on Dividend Stocks

Senior Man Sitting On Sofa At Home With Pet Labrador Dog
Dividend Stocks

RRSP Investors: 2 Stocks to Buy Now for a Personal Pension Fund

RRSP investors can find top TSX dividend stocks at cheap prices today.

Read more »

Cogs turning against each other
Dividend Stocks

1 Passive-Income Stock to Counter Volatility

Looking for a stock that can counter volatility now and tomorrow? This stock is a reliable option for growth and…

Read more »

edit Real Estate Investment Trust REIT on double exsposure business background.
Dividend Stocks

A Top REIT for High-Yielding Income

This top REIT on the TSX offers investors a considerable amount in shareholder dividends through its massive dividend yield.

Read more »

investment research
Dividend Stocks

Young Investors: Create Cash Flow With This Top Dividend Stock

If you're a young investor looking for cash flow, you need a strong dividend stock and solid banking program designed…

Read more »

Hand writing Time for Action concept with red marker on transparent wipe board.
Dividend Stocks

3 Superb Dividend Stocks I’m Ready to Buy

The market is full of great options for income-seeking investors. Here are three superb dividend stocks to buy now.

Read more »

Payday ringed on a calendar
Dividend Stocks

Gen Z Investors: Create a Stable Passive-Income Stream of $188/Month for Retirement

This passive-income stock is perfect for Gen Z investors who don't have much to invest but want to see stable,…

Read more »

exchange-traded funds
Dividend Stocks

2 ETF Bargains You Shouldn’t Miss in 2022

Index ETFs are only discounted when there is a market-wide slump, which is rarer than sector-specific dips, so you should…

Read more »

House Key And Keychain On Wooden Table
Dividend Stocks

2 Real Estate Stocks to Add Growth to Your Portfolio

The right real estate investments, whether they are properties or real estate stocks, usually offer a decent mix of income…

Read more »