When evaluating some of the best stocks to invest in and reviewing an investment’s dividend yield, it’s hard not to consider one of Canada’s big bank stocks. The bank stocks do offer investors an impressive mix of stable revenue generation, defensive appeal, and strong growth potential to complement those dividends.
One Canadian bank that has been getting a lot of attention lately is Bank of Nova Scotia (TSX:BNS). Known as Canada’s most international bank, Scotiabank offers a mix of unique advantages to investors, which become clearer once you break down its operations.
Here’s a look at what the bank offers and if it’s worth investing in now, even with its current dividend yield. To understand whether Bank of Nova Scotia stock is a buy, it helps to look at how the bank generates its growth.
About Scotiabank
As one of Canada’s big banks, Scotiabank operates both a conservative, reliable, and stable domestic segment and a growth-focused international unit.
While the domestic segment generates the bulk of the bank’s revenue, the international segment has steadily increased its contribution over the years.
Scotiabank’s international focus was, until recently, concentrated in developing Latin American markets. That focus is now shifting to more mature markets in North America, such as the U.S. and Mexico.
That strategic shift is beginning to show up in the bank’s results. In the most recent quarterly update, Scotiabank earned $2,206 million, or $1.65 per share. This was a noted increase over the $1,689 million, or $1.22 per share, reported in the same period last year.
The international segment accounted for $678 million of that number, reflecting an increase of $34 million over the same period last year.
What about that dividend?
One of the main appeals of Scotiabank is its quarterly dividend. The bank has been paying out dividends for well over a century, and today that yield continues to impress investors.
As of the time of writing, Scotiabank offers a robust 4.3% yield. The bank’s payout ratio comes in near 75%, which makes it a sustainable option for investors. It’s also worth noting that Scotiabank’s yield is higher than its big-bank peers.
For income-seekers, this means that a $35,000 investment (as part of a larger, diversified portfolio) will earn an income of approximately $1,500.
Even better, prospective investors should note that Scotiabank has provided generous annual bumps to that dividend going back over a decade.
This makes the bank a solid buy-and-forget option for any portfolio. It also means that investors who aren’t ready to draw on that income yet can choose to reinvest those dividends, allowing them to continue to grow until needed.
Is Scotiabank a buy for its dividend yield?
Scotiabank’s dividend is an appealing draw for prospective investors, but it isn’t the only draw that should be considered. The bank’s ongoing share buybacks push into more mature markets for growth, and its recent acquisitions add to the overall appeal.
The last factor is the dividend. Scotiabank’s impressive streak of annual increases makes it a compelling pick for any well-diversified portfolio.
Buy it, hold it, and watch your future income grow. For investors asking whether Bank of Nova Scotia stock is a buy, the combination of yield, stability, and long-term growth potential makes a strong case.
