Bank of Nova Scotia

Sound bite for Twitter and StockTwits is: Buy for rising income/cap gains. Price is reasonable to expensive. As with other banks, the recommendations are all over the place and analysts collectively do not see much further gains for banks stock within the year. See my spreadsheet on Bank of Nova Scotia.

I do not own this stock of Bank of Nova Scotia (TSX-BNS, NYSE-BNS). This is one of the big banks of Canada. All our big banks are dividend growth companies. My son owns shares in this bank. I would expect dividends to be moderate to good with moderate dividend growth over the longer term. This is a dividend growth stock.

The dividend yield on this stock is moderate to good. The dividend growth is low to moderate. The current dividend yield is 3.86%. The historical median dividend yield is 3.92% and the 5 and 10 year median dividend yields are 4.12% and 4.11% respectively. The dividend growth over the past 5, 10 and 15 years is 7.04%, 6.74% and 10.78% per year. This bank only stopped dividend growth in one year, 2010, because of the 2008 recession.

If you had bought this stock 5, 10 or 15 years ago and paid a median price, you would be earning 5.6%, 5.8% or 12% on your original purchase price. If you purchase this stock at today's price of $67.64 and increases continued at 7% per year, then in 5, 10 or 15 years you could be earning 5.42%, 7.60% or 10.66% dividend yield on your purchase price.

Generally Canadian banks have Dividend Payout Ratios of 40% to 55% of EPS. This company in 2016 had a Dividend Payout Ratio of 49.9% and the 5 year average is 46.4%. So this bank's DPR is within normal parameters.

Shareholders have done fine over the past 5 and 10 years in total return. The 5 and 10 year total return to the end of 2016 is at 10.79% and 7.43% per year. The portion of this total return attributable to dividends is 4.25% and 3.73% per year. The portion of this total return attributable to capital gains is 6.53% and 3.70% per year.

The 5 year low, median and high median Price/Earnings per Share Ratios are 10.29, 11.32 and 12.50. The 10 year corresponding values are 10.65, 11.75 and 13.15. The corresponding historical values are 10.29, 11.32 and 13.20. The current P/E Ratio is 12.15 based on a stock price of $76.64 and 2016 EPS estimate of $6.31. This stock price testing suggest that the stock price is relatively reasonable, but above the median.

I get a Graham Price of $64.37. The 10 year low, median and high median Price/Graham Price Ratios are 0.86, 0.96 and 1.13. The current P/GP Ratio is 1.19 based on a stock price of $76.64. This stock price testing suggests that the stock price is relatively expensive.

I get a 10 year median Price/Book Value per Share Ratios of 1.95. The current P/B Ratio is 2.63 based on a stock price of $76.64 and BVPS of $29.18. This stock price testing suggests that the stock price is relatively expensive.

I get a historical dividend yield of 3.92%. This is just 1.5% higher than the current dividend yield of 3.86% based on dividends of $2.96 and a stock price of $76.64. This stock price testing suggest that the stock price is relatively reasonable, but (slightly) above the median.

When I look at analyst's recommendations they are very broad as there are Strong Buy, Buy, Hold and Underperform Recommendations. The consensus recommendation would be a Buy. The 12 months stock price consensus is $79.59. This implies a total return of 7.71% with 3.85% from capital gains and 3.86% from dividends.

Will Ashworth writes an interesting article in the Motley Fool about banks going more into insured mortgages at he believe the detriment of the Canadian public. Staff at Wall Street Beacon talk about institutions increasing their ownership in this bank. Don Majors on Sports Perspectives talk about recent analysts ratings on this bank. (This is a US site so some prices are in US$. Stock prices seem to be in US$, but earnings seem to be in CDN$). See what analysts are saying on Stock Chase.

The last stock I wrote about was about was Toronto Dominion Bank (TSX-TD, NYSE-TD)... learn more . The next stock I will write about will be National Bank of Canada (TSX-NA, OTC-NTIOF)... learn more on Monday, January 23, 2017 around 5 pm.

The Bank of Nova Scotia is a bank. They offer personal and corporate banking and wealth management services in Canada and US, which includes looking after banking, financing, investing, credit card and insurance needs. They offer mortgages and mutual funds and they offer full service and on-line brokerage services. It is an international bank having banking in Canada and some 40 other countries around the world in the geographic regions of the Caribbean and Central America, Mexico, Latin America and Asia. Its web site is here Bank of Nova Scotia.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.