Is it a good company at a reasonable price? This bank has generally done fine for its shareholders, but return has varied in the past and long term returns have not always been above 8%. Canadian banks are at present relatively expensive and at all time highs or close to all-time highs. This bank is not different. I would think that now is not the time to be buying Canadian Banks. The stock price for this bank looks relatively high. It is still showing as relatively reasonable, but it is above the 10 year median.
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.
When I was updating my spreadsheet, I noticed that the officers I follow and the Chairman bought shares over the past year. This stock went up 31% over the past year. Note not as good as TD did, but still a good gain.
If you had invested in this company in December 2015, for $1,007.46 you would have bought 18 shares at $55.97 per share. In December 2025, after 10 years you would have received $660.60 in dividends. The stock would be worth $1,822.14. Your total return would have been $2,482.74. This would be a total return of 11.11% per year with 6.10% from capital gain and 5.01% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $55.97 | $1,007.46 | 18 | 10 | $660.60 | $1,822.14 | $2,482.74 |
The current dividend yield is moderate with dividend growth low. The current dividend yield is moderate (2% to 4% ranges) at 4.31%. The historical median dividend yield is moderate at 4.26%. The 5 and 10 year median dividend yields are good (5% to 6% ranges) at 5.91% and 5.18%. The dividend growth is low (below 8% per year) at 3.7% per year over the past 5 years. The last dividend increase was in 2025 and it was for 3.8%.
The Dividend Payout Ratios (DPR) are generally too high and need improving. The DPR for 2025 for Earnings per Share (EPS) is high at 76% with 5 year coverage at 62%. The DPR for 2025 for Adjusted Earnings per Share (AEPS) is high at 61% with 5 year coverage at 57%. The DPR for 2025 for Cash Flow per Share (CFPS) is very high at 99% with 5 year high coverage at 43%. The DPR for 2025 for Free Cash Flow (FCF) is high at 58% with 5 year coverage good at 43%. (As with other stocks, only WSJ is giving a FCF value. Other sites have stopped doing this.)
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 76.19% | 61.74% |
| AEPS | 60.93% | 56.78% |
| CFPS | 98.75% | 43.62% |
| FCF | 57.93% | 43.39% |
Debt Ratios are good. The Long Term Debt/Market Cap Ratio for 2025 is high at 8.50 and currently at 7.68. However, we need also to look at the Long Term Debt/Covering Assets Ratio for 2025 which is good at 0.72 and currently at 0.72 because this is a more important ratio for a bank. The Liquidity Ratio for 2025 is low at 1.08 and 1.08 currently. However, this is not an important ratio for a bank. The Debt Ratio for 2025 is good for a bank at 1.08 and 1.08 currently. The Leverage and Debt/Equity Ratios for 2025 are good at 4.5% and currently at 4.5%.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term R A | 0.72 | 0.72 |
| Lg Term R | 8.50 | 7.68 |
| Intang/GW | 0.14 | 0.13 |
| Liquidity | 1.08 | 1.08 |
| Liq. + CF | 1.08 | 1.08 |
| Debt Ratio | 1.06 | 1.06 |
| Leverage Bk | 4.5% | 4.5% |
The Total Return per year is shown below for years of 5 to 40 to the end of 2025. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See chart below.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2020 | 5 | 3.71% | 13.13% | 8.03% | 5.10% |
| 2015 | 10 | 4.73% | 11.11% | 6.10% | 5.01% |
| 2010 | 15 | 5.41% | 8.08% | 3.89% | 4.19% |
| 2005 | 20 | 6.11% | 8.04% | 4.01% | 4.03% |
| 2000 | 25 | 9.01% | 11.14% | 6.37% | 4.77% |
| 1995 | 30 | 9.15% | 15.36% | 9.09% | 6.27% |
| 1990 | 35 | 8.48% | 18.26% | 10.48% | 7.78% |
| 1985 | 40 | 8.42% | 14.06% | 8.73% | 5.33% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 9.59, 11.10 and 12.58. The corresponding 10 year ratio 9.30, 10.94 and 12.55. The corresponding historical ratios are 10.14, 11.19 and 14.48. The current ratio is 12.91 based on a stock price $102.18 and EPS estimate for 2026 of $7.92. The current ratio is above the high ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively expensive.
I also have Adjusted Earnings per Share (AEPS) data. The 5-year low, median, and high median Price/Earnings per Share Ratios are 8.47, 9.91 and 11.34. The corresponding 10 year ratio 8.72, 10.23 and 11.68. The corresponding historical ratios are 9.10, 10.90 and 12.63. The current ratio is 12.74 based on a stock price $102.18 and AEPS estimate for 2026 of $8.02. The current ratio is above the high ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively expensive.
I get a Graham Price of $105.98. The 10-year low, median, and high median Price/Graham Price Ratios are 0.63, 0.78 and 0.92. The current ratio is 0.96 based on a stock price of $102.18. The current ratio is above the high ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively expensive.
I get a 10-year median Price/Book Value per Share Ratio of 1.40. The current ratio is 1.64 based on a Book Value of $76,927M, Book Value per Share of $62.24 and a stock price of $102.18. The current ratio is 18% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I also have a Book Value per Share estimate for 2026 of $65.16. This implies a ratio of 1.57 with a stock price of $102.18 and a Book Value of $80,538M. This ratio is 12% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get a 10-year median Price/Cash Flow per Share Ratio of 5.05. The current ratio is 23.36 based on Cash Flow for the last 12 months of $5,407M, Cash Flow per Share of $4.37 and a stock price of $102.18. The current ratio is 362% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive. However, this test is not a good one for banks as the cash flow for banks fluctuates a lot.
I get an historical median dividend yield of 4.26%. The current dividend yield is 4.31% based on a stock price of $102.18 and dividends of $4.40. The current dividend yield is 1.08% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a 10 year median dividend yield of 5.18%. The current dividend yield is 4.31% based on a stock price of $102.18 and dividends of $4.40. The current dividend yield is 17% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable but above the median.
The 10-year median Price/Sales (Revenue) Ratio is 2.74. The current P/S Ratio is 3.23 based on Revenue estimate for 2026 of $39,082M, Revenue per Share of $31.62 and a stock price of $102.18. The current ratio is 18% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.
Results of stock price testing is that the stock price is still reasonable but at the top of the reasonableness range. The 10 year dividend yield test is considered currently to be better than the historical dividend yield test and the 10 year test says that the stock price is reasonable but above the median. The P/S Ratio test confirms the 10 year median dividend yield test. The test of the testing says either the stock price is reasonable but above the median or expensive.
When I look at analysts’ recommendations, I find Strong Buy (4), Buy (1), Hold (8) and Underperform (2). The consensus is a Buy. The 12 month stock price consensus is $101.20 with a high of $109.00 and low of $92.00. The current stock price consensus of $101.20 implies a total return of 3.35% with a capital loss of 0.96% and dividends of $3.35% based on a current stock price of $102.18. The Buy recommendation does not really line up with this 12 month total return. The total return lines up with the Underperform status.
Analyst on Stock Chase all not all positive about this bank, but feel that nothing much bad will happen. Rajiv Nanjapla on Motley Fool says to buy this bank for its passive income. Amy Legate-Wolfe on Motley Fool reviews this bank and says it could be a good buy for your TFSA account. The company put out a press release about their fourth quarter of 2025.
Simply Wall Street via Yahoo Finance reviews this stock and thinks that there are several reasons to buy this bank even though it is not the largest of the big bank stocks. They think that the valuation is favourable and it has long term potential. They have one warning of significant insider selling over the past 3 months. I do not see this. Often not taking up options and insider selling is confused. In the past year the CEO, and an officer I follow plus the chairman have bought stock.
The Bank of Nova Scotia is a global financial services provider. The bank has four major business segments: Canadian banking, international banking, global wealth management, and global banking and markets. The bank's international operations span numerous countries and are more concentrated in the Latin America region. Its web site is here Bank of Nova Scotia.
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 19, 2026 around 5 pm.
This blog is meant for educational purposes only and is not to provide investment advice. I am not a licensed professional investment advisor. 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.
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