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. Besides, my son owns shares in this bank.
When I was updating my spreadsheet, I noticed that last year was not a good year for this stock. The 5 year total return for the year end values was 4.78% with 0.48% from capital gains and 4.30% from dividends. Their financial year is in October each year, so the last financial year end was October 30, 2018.
There was better dividend growth in the past than recently as you can see from the chart below. Currently the dividends are moderate at 4.77%. The 5, 10 and historical dividend yields are also moderate at 4.26%, 4.15% and 4.12%. Dividend growth recently has been low. Dividend growth over the past 5 years was just 6.54% per year. Dividends went up 7.6% this year with the last increase of 4.9% in 2018. They often do two increases a year.
Their Dividend Payout Ratio for EPS for the 2018 financial year 48.09% with 5 year coverage at 47.65%. Their DPR for CFPS for 2018 was 22.60% with 5 year coverage at 30.63%. The important ratio here is the one for EPS.
Their Long Term Debt/Covering Assets Ratio for 2018 was really low at just 0.41. The median ratio for the last 5 years was 0.93. The Debt Ratio was good for 2018 at 1.07. The 5 year median ratio was also 1.07.
The Total Return per year is shown below for years of 5 to 33 to the end of 2018. 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 charts below.
As you can see, shareholders have done very well for most years. Problem with the 5 year total return is that the stock price is not much higher than it was 5 years ago. This happens sometimes. Most analysts see the stock heading higher.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2013 | 5 | 6.54% | 4.78% | 0.48% | 4.30% |
| 2008 | 10 | 5.50% | 12.79% | 7.40% | 5.39% |
| 2003 | 15 | 9.51% | 9.43% | 4.96% | 4.47% |
| 1998 | 20 | 11.09% | 11.84% | 7.22% | 4.62% |
| 1993 | 25 | 10.34% | 14.17% | 9.13% | 5.04% |
| 1988 | 30 | 9.96% | 16.00% | 10.24% | 5.76% |
| 1985 | 33 | 9.38% | 14.30% | 9.35% | 4.95% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 10.14, 11.29 and 12.52. The 10 year corresponding ratios are 10.22, 11.30 and 12.68. The historical corresponding ratios are 7.04, 11.29 and 14.57. The current P/E Ratio is 9.80 based on a current stock price of $71.28 and 2019 EPS estimate of $7.27. This stock price testing suggests that the stock price is relatively cheap.
I get a Graham Price of $90.21. The 10 year low, median, and high median Price/Graham Price Ratios are 0.83, 0.93 and 1.02. The current P/GP Ratio is 0.79 based on a stock price of $71.28. This stock price testing suggests that the stock price is relatively cheap.
I get a 10 year median Price/Book Value per Share Ratio of 1.85. The current P/B Ratio is 1.43 based on Book Value of $64,044, Book Value per Share of $49.75 and a stock price of $71.28. The current P/B Ratio is some 22.34% below the 10 year ratio. This stock price testing suggests that the stock price is relatively cheap.
I get an historical median dividend yield of 4.12. The current dividend yield is 4.77% based on dividends of $3.40 and a stock price of 71.28. The current yield is some 15.77% above the historical dividend yield. This stock price testing suggests that the stock price is relatively reasonable and below the median.
The 10 year median Price/Sales (Revenue) Ratio is 3.29. The current P/S Ratio is 2.81 based on 2019 Revenue estimate of $31,151M, Revenue per Share of $22.66 and a stock price of $71.28. The current ratio is 14.70% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
The testing is showing that the stock price is on the cheap side. A number are showing it relatively cheap and the P/S Ratio test and dividend yield test are showing it as cheap and below the median (by around 15%). So price is cheap or leading towards cheap.
When I look at analysts’ recommendations, I find Strong Buy (1), Buy (7), Hold (4), Underperform (1). The consensus would be a Buy. The 12 month stock price is $84.01. This implies a total return of 22.73% with 17.96% from Capital Gain and 4.77% from dividends.
Paul Bagnell on BNN Bloomberg talks about recent BNS deals. Mary Kom on Fairfield Current talks about recent target prices for this bank. Doug Alexander in a Toronto Star article talks about this bank selling their bank holding in Thailand. Nelson Smith on Motley Fool says that this is his favourite bank. See what analysts are saying about this bank on Stock Chase. Analysts seem to like Canadian Banks. Some think this one is a good buy at present.
The Bank of Nova Scotia is known as Canada's "international bank" and is a global financial services provider. The bank has three business segments: Canadian banking, international banking, and global banking and markets. It is the third- largest bank in Canada. The bank's international operations span numerous countries, and are more concentrated in Central and South America. 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 Friday, January 18, 2019 around 5 pm. Tomorrow on my other blog I will write about Long Term Returns.... learn more on Thursday, January 15, 2019 around 5 pm.
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.
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