Canada’s big banks are among the best long-term options for investors to consider. At least, that’s the common view that investors have shared for many years. Does that still ring true, though? Should investors buy, sell, or hold the big banks in 2025?
Let’s try to answer that buy, sell or hold question with a lens on Bank of Nova Scotia (TSX: BNS)
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The case to buy
There are more than a few reasons why Scotiabank is a great option for investors looking to buy into one of the big banks.
Starting with the obvious, there’s the dividend. Scotiabank offers a very tasty quarterly dividend that, as of the time of writing, works out to a yield of 6.10%. That’s among the best-paying dividends on the market and among its peers.
Then, we have growth potential. Scotiabank continues to provide annual upticks to that dividend, which, when factoring in expected earnings growth, can lead to an annualized return of 10% or more over the next several years.
Much of that growth comes as Scotiabank shifts its growth policy from its focus on the Latin American markets to the United States and Mexico.
Finally, there’s the stable Canadian market, which provides a solid and reliable base for the bank’s revenue.
In short, Scotiabank can cater to income-seeking and growth-seeking investors as part of any well-diversified portfolio.
The case to sell
Despite all of that appeal that Scotiabank holds, there are some notable concerns leading investors to consider selling the stock.
The first reason would be the bank’s underperformance, particularly when compared with its peers. Scotiabank’s growth focus on Latin America offers higher growth potential, but that potential comes with greater risk.
Recovery from any downturn in those developing markets also has a longer tail when compared with markets in North America. This was a key reason why Scotiabank’s post-covid recovery took longer than the other big banks.
There’s also the general uncertainty of the market. The market has proven to be incredibly volatile this year, and we’re barely through the first quarter. In short, existing investors with shorter timelines may be inclined to take some profit or move to more defensive holdings.
The case to hold
The final option for existing investors to contemplate is just holding onto Scotiabank stock. This view is focused on three key points for investors to note.
First, Scotiabank offers a very juicy dividend and has paid that dividend for nearly two centuries without fail. This makes it an incredible option to consider even during the most volatile of times.
Second, that volatility doesn’t mean that Scotiabank will not continue to pursue growth. Scotiabank is continuing to invest in growth initiatives, particularly in the U.S.
Finally, let’s note the stability that Scotiabank has from its domestic arm in Canada. Despite the ongoing volatility from abroad and the overall market, the Canadian market remains well-regulated and provides ample revenue generation opportunities.
In other words, despite market volatility, Scotiabank remains a top pick for investors with longer-term timelines.
Final thoughts: Buy, sell, or hold Scotiabank?
No stock, even the most defensive, is not without some risk. In the case of Scotiabank, that risk is evident as the bank transitions away from some of its Latin American holdings to the increasingly volatile U.S. market.
Thankfully, Scotiabank has a strong domestic segment, notable growth potential and a handsome dividend. This makes it an excellent option for new investors to consider and existing investors to continue holding.
