BNS Stock: Here’s What’s Coming in 2023

Here’s what investors and market participants should look for in 2023 when it comes to Bank of Nova Scotia (TSX:BNS) stock.

| More on:
woman data analyze

Image source: Getty Images.

The global stock market continues to be in a difficult position as we kick off 2023. Sure, most markets have seen dramatic improvement through the first few weeks of this year. However, many of the same macroeconomic headwinds the world faced in 2022 have not gone away. Inflation is still high, war is brewing in Eastern Europe, and pandemic-related supply chain issues haven’t completely gone away.

Sure, things are improving, seemingly on all these fronts. But for investors looking at the outlook for most stocks this year, the only thing that’s certain is that there’s likely to be a great deal of uncertainty to be priced into most stocks.

Here’s the outlook for one of Canada’s biggest banks this year.

A Dividend Aristocrat with high growth potential

One of the biggest and oldest banks in Canada is Bank of Nova Scotia (TSX:BNS), popularly known as Scotiabank. 

The lender’s impressive dividend yield of nearly 6% is undoubtedly alluring. This yield has led to relative resilience with respect to BNS stock, as compared to its peers. Over time, Scotiabank has proven its worth as a Dividend Aristocrat, increasing its payout every year for the past 45 years.

Accordingly, from a passive-income perspective, there are few better TSX stocks to own in this uncertain environment. Yes, the company’s relatively high yield could signal the market believes some sort of cut could be in order, or the stock is overvalued right now. But at this level, it’s clear that BNS stock will likely derive significant investor interest, at least in the coming months, as investors look for the best bank of the bunch when it comes to the Canadian market.

New CEO of Scotiabank believes there is space to improve global operations

The new chief executive of Bank of Nova Scotia, Scott Thomson, claims that the rewards from the bank’s international strategy haven’t matched the risks, and that a great opportunity exists to improve the bank’s business lines going forward.

Despite difficulties during the COVID-19 epidemic, according to Thomson, performance in unsecured international retail banking operations has improved. Unsecured lending is the term used by banks to describe loans that aren’t secured by assets. Credit card loans are a good example of unsecured lending, because the borrower can take out a loan without pledging an asset as security to repay the amount.

Thomson noted that only a small amount of the bank’s overall activities was made up of the unsecured loans, bolstering the bank’s position, particularly in international lending markets.

Bottom line 

A remarkably resilient Canadian bank, Scotiabank has been paying dividends for almost 200 years. BNS stock is right now in value territory, providing investors with relatively stable dividend income, while waiting for the next bull market to materialize.

I think the 2023 outlook for Scotiabank is one that could be more positive than the market thinks. If we avoid some sort of deep recession this year, this is a stock with the potential to outperform.

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 Chris MacDonald has no position in any of the stocks mentioned. The Motley Fool recommends Bank Of Nova Scotia. The Motley Fool has a disclosure policy.

More on Bank Stocks

stock research, analyze data
Bank Stocks

Better Buy: TD Stock or Bank of Nova Scotia?

TD Bank and Bank of Nova Scotia still look cheap. Is one a good buy today?

Read more »

edit Four girl friends withdrawing money from credit card at ATM
Bank Stocks

2 Top TSX Bank Stocks to Buy in February 2023

Here's why Toronto-Dominion Bank (TSX:TD) and Bank of Nova Scotia (TSX:BNS) are two top TSX bank stocks to consider right…

Read more »

grow money, wealth build
Bank Stocks

TFSA Investors: A Big Bank Stock That Pays Almost 6% in Dividend Income

A Big Bank stock is an ideal core holding in a TFSA, not only for its financial stability but also…

Read more »

Target. Stand out from the crowd
Bank Stocks

BMO Stock looks Better Than its Peers in January 2023

What's next for BMO stock after a downfall in 2022?

Read more »

Bank sign on traditional europe building facade
Bank Stocks

As Banks Expand South of the Border, Which Is the Better Bet for Growth?

Canada’s big banks are expanding into the U.S. market. Here’s a look at which of these titans is a better…

Read more »

Young woman sat at laptop by a window
Bank Stocks

Could BMO Stock Be a Big Winner in 2023?

Long-term investors should take a closer look at BMO stock as a potential core holding, especially on dips.

Read more »

IMAGE OF A NOTEBOOK WITH TFSA WRITTEN ON IT
Tech Stocks

TFSA Passive Income: How I’m Investing to Make $2,000/Year From Dividends

I am increasing my dividend income by investing in dividend stocks like the Toronto-Dominion Bank.

Read more »

Make a choice, path to success, sign
Bank Stocks

Of the Big 6 Bank Stocks: Buy This, Not That

CIBC (TSX:CM) is an interesting Big Six bank stock to buy right now.

Read more »