The Bank of Nova
Scotia (Scotiabank) is Canada’s third largest bank with operations in Canada,
the US and 50 foreign countries. BNS
has earned a 14-20% return on equity over the last ten years and has grown
profits and dividends at a 9-12% pace. While the 2008-2009 financial credit
crisis impacted BNS , it weathered
the storm much better than most large US banks and should continue to
grow earnings and dividends as a result of:
(1) expansion of
its broadly diversified global loan portfolio,
(2) acquisitions
in the overseas markets,
(3) a very
strict cost control program,
(4) rapid revenue increases in its newly
formed wealth management group,
(5) increased
banking fees,
Negatives:
(1) a slowdown
in the Canadian mortgage market,
(2) increased
losses on commercial loans,
(3) margin
pressures.
Statistical Summary
Stock Dividend Payout # Increases
Yield Growth Rate Ratio
Since 2004
Ind Ave 2.5 11 32 NA
Debt/ EPS Down Net Value Line
Equity ROE Since 2004 Margin Rating
Ind Ave 42 10 NA NA* NA
*banks’ income statements don’t
provide a Net Margin number
Chart
Note:
BNS stock made good progress off its March 2009 low, surpassing the downtrend off
its October 2007 high (straight red line) and its November 2008 trading high
(green line). Long term, it is in an
uptrend (blue lines), Intermediate term,
it is also in an uptrend (purple lines).
The wiggly red line is the 50 day moving average. The
High Yield Portfolio owns a 50% position in BNS. The upper boundary of its Buy Value Range is
$31; the lower boundary of its Sell Half Range is $76.
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