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Bank of Nova Scotia (BNS) is a Top Dividend Stock Right Now: Should You Buy?
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All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. However, when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
Cash flow can come from bond interest, interest from other types of investments, and of course, dividends. A dividend is the distribution of a company's earnings paid out to shareholders; it's often viewed by its dividend yield, a metric that measures a dividend as a percent of the current stock price. Many academic studies show that dividends make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
Bank of Nova Scotia in Focus
Bank of Nova Scotia (BNS - Free Report) is headquartered in Toronto, and is in the Finance sector. The stock has seen a price change of -0.36% since the start of the year. The bank is paying out a dividend of $0.71 per share at the moment, with a dividend yield of 4.38% compared to the Banks - Foreign industry's yield of 2.77% and the S&P 500's yield of 1.32%.
Looking at dividend growth, the company's current annualized dividend of $3.13 is up 9.6% from last year. Over the last 5 years, Bank of Nova Scotia has increased its dividend 3 times on a year-over-year basis for an average annual increase of 5.18%. Looking ahead, future dividend growth will be dependent on earnings growth and payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Right now, Bank of Nova Scotia's payout ratio is 45%, which means it paid out 45% of its trailing 12-month EPS as dividend.
BNS is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2022 is $6.66 per share, representing a year-over-year earnings growth rate of 6.56%.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. But, not every company offers a quarterly payout.
For instance, it's a rare occurrence when a tech start-up or big growth business offers their shareholders a dividend. It's more common to see larger companies with more established profits give out dividends. Income investors must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. That said, they can take comfort from the fact that BNS is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #1 (Strong Buy).
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Bank of Nova Scotia (BNS) is a Top Dividend Stock Right Now: Should You Buy?
All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. However, when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
Cash flow can come from bond interest, interest from other types of investments, and of course, dividends. A dividend is the distribution of a company's earnings paid out to shareholders; it's often viewed by its dividend yield, a metric that measures a dividend as a percent of the current stock price. Many academic studies show that dividends make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
Bank of Nova Scotia in Focus
Bank of Nova Scotia (BNS - Free Report) is headquartered in Toronto, and is in the Finance sector. The stock has seen a price change of -0.36% since the start of the year. The bank is paying out a dividend of $0.71 per share at the moment, with a dividend yield of 4.38% compared to the Banks - Foreign industry's yield of 2.77% and the S&P 500's yield of 1.32%.
Looking at dividend growth, the company's current annualized dividend of $3.13 is up 9.6% from last year. Over the last 5 years, Bank of Nova Scotia has increased its dividend 3 times on a year-over-year basis for an average annual increase of 5.18%. Looking ahead, future dividend growth will be dependent on earnings growth and payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Right now, Bank of Nova Scotia's payout ratio is 45%, which means it paid out 45% of its trailing 12-month EPS as dividend.
BNS is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2022 is $6.66 per share, representing a year-over-year earnings growth rate of 6.56%.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. But, not every company offers a quarterly payout.
For instance, it's a rare occurrence when a tech start-up or big growth business offers their shareholders a dividend. It's more common to see larger companies with more established profits give out dividends. Income investors must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. That said, they can take comfort from the fact that BNS is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #1 (Strong Buy).