People getting rich in the stock market is accurate, not fiction. The key is investing in established and well-managed companies whose business will unlikely fail for decades. Examples of these companies are Bank of Nova Scotia (TSX:BNS) and TELUS (TSX:T).
Canada’s fourth-largest lender pays a hefty 6.66%, the highest yield among the Big Six banks, while the second-largest telco offers a juicy 6.91% dividend. Both are not immune from headwinds, but you can be sure they can weather market pullbacks, even market crashes. More importantly, you can buy the stocks this year and hold them forever.
Wealth-builder
BNS suits Canadians looking to build wealth or have a substantial nest egg in retirement. The $78.28 billion bank has been paying dividends for 192 years and has raised its dividends annually for 12 consecutive years. Its dividend track record is a compelling reason to invest in the big bank stock. The current share price is $63.67.
In the first half of fiscal 2024 (six months ending April 30, 2024), total revenue and net income increased 5.7% and 9.9% year over year to $16.8 billion and $4.3 billion. The provision for credit losses (PCL) rose 46.2% to $1.3 billion from a year ago. In the second quarter (Q2) of fiscal 2024, the adjusted earnings of the Canadian Banking segment reached $1 billion and outpaced expense growth.
BNS’s president and chief executive officer (CEO) Scott Thomson said, “We are executing on our commitment to balanced growth as our deposit momentum continues, while maintaining strong capital and liquidity metrics.” As of July 2024, the Fitch Rating for BNS is AA-, given the risks in major markets outside Canada, such as Chile, Colombia, Mexico, and Peru.
Nonetheless, the rating agency said BNS maintains a strong business profile due to its strong retail banking market share in the home country. It has a long-standing top-three position in loans and customer deposits. The diversified business model also ensures consistent profitability.
The five-year plan introduced in December 2023 focuses on four strategic pillars: growing and scaling in priority businesses over the medium term; earning deeper primary client relationships across the portfolio; facilitating business by building seamless experiences; and building the bank’s talent and culture to win as one team.
According to Fitch, BNS is making progress on its commitments, and the franchise should be stronger by prioritizing higher-earning products over business volume.
Dividend Aristocrat
TELUS is a Dividend Aristocrat owing to 19 consecutive years of dividend hikes. At $22.52 per share, you’d be investing in a dividend grower. The competition in the telecommunications industry is fierce, yet this telco continues to impress investors.
In Q2 2024, operating revenues dipped 0.69% to $4.9 billion versus Q2 2023, while net income and free cash flow (FCF) increased 12.8% and 71.3% year over year to $221 million and $478 million. TELUS mobile phone net additions during the quarter were 101,000, and the connected device net additions reached a record 161,000.
TELUS’s president and CEO, Darren Entwistle, said the quarterly results reflect the company’s ability to deliver sustainable, profitable growth. He expects the business to remain resilient in the coming quarters.
Dividend titans
You don’t need to time the market to invest in the Bank of Nova Scotia or TELUS. Both have been among the TSX’s dividend titans for years.
