In the February 2013 issue of Canadian Wealth Advisor, we named Bank of Nova Scotia our #1 safety-conscious pick for 2013 at $58.80 a share. The stock hit all-time highs and by the end of the year it had risen by 12.9%, or 16.8% including dividends. We think it has further gains ahead.
A week from tomorrow, on Friday, February 7, we will name our safety-conscious stock of the year for 2014 in the next issue of Canadian Wealth Advisor.
BANK OF NOVA SCOTIA (Toronto symbol BNS; www.scotiabank.com) is the third-largest of Canada’s five big banks, with assets of $743.8 billion.
In its fiscal 2013 fourth quarter, which ended October 31, 2013, the bank earned $1.30 a share, up 10.2% from $1.18 a year earlier.
Higher loan demand and an increase in deposits pushed up the Canadian banking division’s earnings by 23.3%. That includes the contribution from ING Direct (see below).
The international banking division’s earnings rose 4.7%, also on stronger loan demand, particularly in Latin America and Asia. The wealth management division’s earnings gained 8.2%, as rising stock prices increased the value of the assets this business manages. The bank continues to see rising loan demand.
High dividend stocks: Bank of Nova Scotia unveils new name for ING Direct Subsidiary
Bank of Nova Scotia bought ING Direct from its Netherlands-based parent, ING Group, for $3.1 billion in November 2012. ING Direct offers a variety of no-fee banking services, mainly over the Internet. It has 1.8 million customers and $30 billion of deposits.
The bank recently announced that it is changing the name of ING Direct to Tangerine. That will let this business keep using the orange colour associated with the ING Direct brand. The deal with ING Group let it keep using the ING Direct name until May 2014.
Late in 2013, Bank of Nova Scotia increased its quarterly dividend payout by 3.3%, to $0.62 a share from $0.60. The new annual rate of $2.48 yields 3.9%.
In the latest issue of Canadian Wealth Advisor, we look at whether loan demand in Canada and international markets is likely to boost earnings significantly and let the bank further raise its dividend. We conclude with our clear buy-hold-sell advice for this stock.
If you’re a member of Pat’s Inner Circle and you’d like to ask a question about today’s article, please go to the question page reserved for you (be sure you’re logged in first). Click here to ask your question.
COMMENTS PLEASE—Share your investment knowledge and opinions with fellow TSINetwork.ca members
If the big Canadian banks went through a sustained period in which they did not raise their dividends (as they did following the financial crisis of 2008) would you be inclined to cut back on the number of shares you hold or even sell the stock altogether? Or do you consider bank stocks to be a permanent fixture in your portfolio?
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X No, I don’t want to make steady income from dividends.
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