Well, after 2 weeks of strong market selloff in the market I couldn’t pass these great buying opportunities of dividend stocks that are on my watch list. I love the short term declining volatility as I am confident that the overall market will eventually recover and be better. With that being said, I’d like to share my recent stock purchase. I have added 50 shares of Bank of Nova Scotia (BNS) at $61.50 on January 19 2015 for a total investment of $3,075 (It is currently at $63.78 today Yay!)
Bank of Nova Scotia is one of the most diversified banks in Canada. It has four main divisions and they are Canadian banking service, International banking service, Global wealth management service and Scotia capital service. Bank of Nova Scotia acquired various companies recently including Aurion Capital Management and Cencosud S.A which made them to reach 18.5 million customers around the world. Let’s take a look through the details and you will understand why I as a long term passive dividend income investor think Bank of Nova Scotia is a strong contender.
1. Very well diversified geographically provides a great hedge against weakness in Canada as opposed to Canadian major banks such as TD, RBC, CIBC, BMO
2. The growth in Latin America is attractive
3. Dividend yield of whooping 4% at current market price
4. Increased its dividend by 35% in the past 4 years
5. Payout ratio of 45% is close to industry norm
6. Planning to grow EPS between 5%- 10% per year which means higher dividend in the future.
7. Lower than 11 on P/E ratio is very appealing. The lowest among Canadian big 5 banks.
1. Made several bad investments in Venezuela and Caribbean and closed which costs total of $450 million or higher however the bank will close about 130 international branches which will lead to cost savings about $120 million or higher per year going forward.
2. The stock is in a downward trend and Canadian major banks consider 2015 to be a tough year to grow.
3. About 15-20% of the Bank of Nova Scotia’s residential mortgages are tied to Alberta which is going through a recession due to declining oil price. It is likely to face higher defaults in mortgage payments.
I think Bank of Nova Scotia is an excellent stock to buy and forget if you are a long term investor. With its relatively new CEO Brian Porter made several significant changes in his senior management team including Latin America operation, wealth management team, marketing head, chief operating officer within really short time frame indicates that the CEO is determined to turnaround already attractive company. Well. I am in!
My purchase will add $132 to my annual dividend
What do you think about my purchase? Do you have more appealing stocks on your watch list?
Have you enjoyed the post? Then share the post with your Facebook friends, like my Facebook page and subscribe your email on your right.