Canadian banks have become very interesting dividend plays over the past couple years, with yields maintaining at relatively high levels, despite yields across the TSX declining of late due to depressed bond yields.
Banks have continued to have strong earnings growth and have continued to raise dividends, but have not seen corresponding share price appreciation, as many investors are shying away from banks like Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) at this particular point in time.
Scotiabank, like its competitors, does have exposure to many of the same risks as its peers related to the Canadian housing market and a potential bubble in financials brewing, but is somewhat more insulated from these risks than its peers due to the lender’s significant global exposure, particularly in Central and Latin America.
I like the diversification Scotiabank provides, and I think the company’s slightly more global presence than most of its peers (except for Toronto-Dominion Bank (TSX:TD)(NYSE:TD) which is heavily invested in the U.S.) will serve investors well in the next downturn.
Scotiabank’s dividend yield has hovered between 4% and 5% for a long time, and investors should consider this payout not only safe from a long-term perspective, but also likely to rise over time, given the company’s’ track record of hiking its dividend over time.
While the yield one may get by investing at different intervals in a company like Scotiabank may change, due to stock price movements, I would lock in this yield today and watch it appreciate over time.
Invest wisely, my friends.
