Among Canadian stocks, finding companies offering investors relatively high dividend yields which are safe is a whole other story. In this article, I am going to discuss the bullish long-term investment thesis for owning Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) as a core income holding in any portfolio.
Scotiabank’s dividend yield has increased at a faster rate relative to its peers during the recent market turmoil we have seen, in part due to a stock price which has declined more rapidly than its peers. This stock price decline is largely related to a streamlining of the company’s international operations.
Once seen as a differentiator and reason for owning Scotiabank rather than its less-diversified peers, the company’s international operations in Latin and South America have required some strategic moves recently. In particular, issues in the Chilean market have been cause for concern for many investors this year.
That said, it also remains true that the Latin/South American markets do provide attractive growth upside. This risk/reward relationship appears to be better suited to investors with a risk-on attitude today, give a potential global economic rebound on the horizon.
A strategic refocus of Scotiabank’s international portfolio was likely overdue, and in that regard, I see these risk factors as being worth the reward which comes in the form of a higher dividend yield and better capital appreciation potential than its peers.
Invest wisely, my friends.
