1 Dividend Stock Down 20% to Buy Right Now

This dividend stock provides investors with more growth towards all-time highs, as well as a superior dividend yield over 6%.

| More on:

Image source: Getty Images

Before I even begin, this title is only a touch misleading. That is, the dividend stock I’m discussing certainly is down 20%. But that’s from all-time highs back in 2022. However, when looking more recently shares of this dividend stock are actually up. And by quite a bit.

That dividend stock is Bank of Nova Scotia (TSX:BNS), which saw shares rise even higher this week after earnings. The dividend stock is now up 22% since bottoming out last year. So here’s why I would pick up BNS stock right this minute.

Eating up earnings

First off, let’s look at these most recent earnings. The dividend stock beat out estimates from analysts, reporting net income of $2.2 billion. This was a slight decrease from the $2.4 billion in the same period last year, on an adjusted basis. And as with other banks, it was driven from higher provisions for credit losses and non-interest expenses.

However, this was partially offset by revenue, with revenue up to $8.4 billion from $8.3 billion the year before. Provisions for credit losses also rose to $962 million from $638 million the year before as the company continued to take on a more cautious outlook.

Even so, management remained optimistic about the year, as well as the bank long term. It continues to focus on how to execute its strategies for long-term growth. So let’s get into this as well.

Looking longer term

Beyond this year, there are quite a few reasons to consider BNS stock as a top dividend stock and growth stock. The company has a strong brand across Canada as one of the biggest banks in the country. It also provides diversification, including here in Canada, as well as internationally.

The company is focused now on expanding through two means. First, through innovation. The stock is investing in its digital transformation, which could lead to even more revenue streams and efficiencies in the future.

What’s more, it’s also investing more and more in emerging markets. This specifically comes down to South America, where the company is looking to become more invested – especially in Mexico, with management stating this could be a huge economy in the future.

The dividend

Then there’s the dividend, and why investors want in on this dividend stock in the first place. BNS stock currently holds a dividend yield at 6.44% as of writing. It also trades at 10.8 times earnings, which is lower than its other bank industry peers.

The dividend stock also has a solid 68% payout ratio, meaning it puts aside a fair amount for dividends but not so much that it can’t invest elsewhere. BNS stock also has a long history of dividend growth, seeing a compound annual growth rate (CAGR) of 5.75% in its dividend over the last five years.

Overall, it is a strong company, with a strong balance sheet, strong dividend growth, and a strong future ahead. It simply is a great investment for those wanting in on a rebounding economy, with shares certain to climb back towards those all-time highs. So I would certainly consider the stock while it’s on the path back up.

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 Amy Legate-Wolfe 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

grow money, wealth build
Bank Stocks

TD Bank Stock Got Upgraded, and It’s a Good Time to Load Up

TD Bank (TSX:TD) stock is getting too cheap, even for analysts at the competing banks!

Read more »

data analyze research
Bank Stocks

3 Top Reasons to Buy TD Bank Stock on the Dip Today

After the recent dip, these three top reasons make TD Bank stock look even more attractive to buy today and…

Read more »

edit Woman calculating figures next to a laptop
Bank Stocks

Where Will Royal Bank of Canada Stock Be in 5 Years?

Here’s why Royal Bank stock has the potential to significantly outperform the broader market in the next five years.

Read more »

consider the options
Bank Stocks

Is RBC a Buy, Sell, or Hold?

Here’s why I think RBC stock is a great buy for long-term investors at current levels despite its dismal performance…

Read more »

edit Woman in skates works on laptop
Stocks for Beginners

1 Passive Income Stream and 1 Dividend Stock for $491.80 in 2024

Need to invest but have nothing to start with? This passive income stream and dividend stock are exactly where you…

Read more »

Dice engraved with the words buy and sell
Bank Stocks

Is BNS a Buy, Sell, or Hold?

Bank of Nova Scotia (TSX:BNS) stock looks like an intriguing high-yield bank stock to pursue this month.

Read more »

grow money, wealth build
Bank Stocks

EQB Stock Has a Real Chance of Turning $500 Into $1,000 by 2030

EQB is an undervalued dividend paying TSX bank stock that should more than double in market cap by the end…

Read more »

A plant grows from coins.
Bank Stocks

Should You Buy TD Stock for Its 5.2% Dividend Yield?

TD Bank stock trades 27% from all-time highs, offering shareholders a tasty dividend yield of 5.2%. Is TD Bank stock…

Read more »