Thursday, December 9, 2010

Bank of Nova Scotia

This is a bank (TSX-BNS) that I follow, however, I do not own of stock in this bank. They on the dividend lists that I follow of Dividend Achievers and Dividend Aristocrats (see indices).

However, they are in the same position on Dividends as the TD Bank is. They have not raised their dividends since 2008. If you look at the 5 and 10 year growth rates for dividends, they come in at 8% and 14.6% per year, respectively. So, if you have held this bank for more than 5 years, you would not have done badly as far as dividend increases go. However, if you have bought this bank since 2008, your dividends would not have changed.

As far a total returns go, the 5 year growth is much weaker than the 10 year growth. The 5 and 10 year in total return come in at 8.5% and 15% per year respectively. The portion of this total return that is in dividends is about 4% per year.

When you look at revenue growth over the past 5 and 10 years, this stock has not done well. The growth is around 5% per year over the past 5 years and this is not bad (but, not good either). The growth for the last 10 years comes in just under 2% per year and this is not good. However, they have lower revenues for the past two years and this is why the growth is so anemic. The growth in earnings could also be better. The 5 and 10 years figures are 4.4% and 8% per year, respectively. The 10 year growth is not bad, but the 5 year growth at 4.4% is rather low. The growth in Book Value is ok at just over 7% per year over the past 5 and 10 years.

The Asset/Liability Ratio for this bank is 1.05 and this is about normal for our banks. The return on equity has always been quite good for this bank, which has a 5 year average ROE of 18.4% and a ROE for the financial year ending in October 2010 of 17%.

The real thing that matter is that if you hold Canadian banks for the long term, you can do very well in both dividends and capital gains.

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 BNS. See my spreadsheet at bns.htm.

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. See my website for stocks followed and investment notes. Follow me on twitter.

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