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This is Why Bank of Nova Scotia (BNS) is a Great Dividend Stock
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Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. But when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
Cash flow can come from bond interest, interest from other types of investments, and of course, dividends. A dividend is that coveted distribution of a company's earnings paid out to shareholders, and investors often view it by its dividend yield, a metric that measures the dividend as a percent of the current stock price. Many academic studies show that dividends make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
Bank of Nova Scotia in Focus
Based in Toronto, Bank of Nova Scotia (BNS - Free Report) is in the Finance sector, and so far this year, shares have seen a price change of -19.7%. The bank is paying out a dividend of $0.8 per share at the moment, with a dividend yield of 5.56% compared to the Banks - Foreign industry's yield of 4.33% and the S&P 500's yield of 1.74%.
Looking at dividend growth, the company's current annualized dividend of $3.20 is up 12% from last year. Bank of Nova Scotia has increased its dividend 4 times on a year-over-year basis over the last 5 years for an average annual increase of 5.03%. Future dividend growth will depend on earnings growth as well as payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Right now, Bank of Nova Scotia's payout ratio is 48%, which means it paid out 48% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for BNS for this fiscal year. The Zacks Consensus Estimate for 2022 is $6.69 per share, with earnings expected to increase 7.04% from the year ago period.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. It's important to keep in mind that not all companies provide a quarterly payout.
High-growth firms or tech start-ups, for example, rarely provide their shareholders a dividend, while larger, more established companies that have more secure profits are often seen as the best dividend options. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, BNS is a compelling investment opportunity. Not only is it a strong dividend play, but the stock currently sits at a Zacks Rank of 3 (Hold).
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This is Why Bank of Nova Scotia (BNS) is a Great Dividend Stock
Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. But when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
Cash flow can come from bond interest, interest from other types of investments, and of course, dividends. A dividend is that coveted distribution of a company's earnings paid out to shareholders, and investors often view it by its dividend yield, a metric that measures the dividend as a percent of the current stock price. Many academic studies show that dividends make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
Bank of Nova Scotia in Focus
Based in Toronto, Bank of Nova Scotia (BNS - Free Report) is in the Finance sector, and so far this year, shares have seen a price change of -19.7%. The bank is paying out a dividend of $0.8 per share at the moment, with a dividend yield of 5.56% compared to the Banks - Foreign industry's yield of 4.33% and the S&P 500's yield of 1.74%.
Looking at dividend growth, the company's current annualized dividend of $3.20 is up 12% from last year. Bank of Nova Scotia has increased its dividend 4 times on a year-over-year basis over the last 5 years for an average annual increase of 5.03%. Future dividend growth will depend on earnings growth as well as payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Right now, Bank of Nova Scotia's payout ratio is 48%, which means it paid out 48% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for BNS for this fiscal year. The Zacks Consensus Estimate for 2022 is $6.69 per share, with earnings expected to increase 7.04% from the year ago period.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. It's important to keep in mind that not all companies provide a quarterly payout.
High-growth firms or tech start-ups, for example, rarely provide their shareholders a dividend, while larger, more established companies that have more secure profits are often seen as the best dividend options. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, BNS is a compelling investment opportunity. Not only is it a strong dividend play, but the stock currently sits at a Zacks Rank of 3 (Hold).