My buy for April is Bank of Nova Scotia (BNS). I was also very interested in AT&T (T) and General Mills (GIS), but they both soared right before I got the capital to deploy, so that ended up making it easier to Bank of Nova Scotia.
Banking is a key industry that I wanted to own, but I have to confess that they still make me a bit nervous. Not just because of 2008, but as any one who reads the news, the big banks like JP Morgan (JPM) are constantly involved in all kinds of lawsuits and bad press.
This is where Bank of Nova Scotia comes in. The Canadian banking system is very stable, they have strict safety regulations and are highly supported by the government and surprisingly by the general population of Canada (probably because so many have their pensions invested in those banks).
Due to their stability and high-dividends they are usually in high demand. However, at the moment there is fear that there is a mortgage crisis brewing in Canada, which would hit the Canadian banks very hard, resulting in much lower valuations.
I am no oracle and I do not feel confident enough making predictions on whether the housing market will crash or not. This is precisely the main reason why I am choosing BNS over its peers, namely Bank of Montreal (BMO). Bank of Nova Scotia is the bank with most international diversification, with only 35% of their income coming from Canadian business. On top of that, they are well positioned to profit from population and purchase power growth in emerging markets.
From a general perspective, based on history and annual reports, they clearly put shareholders at the core of their activity and seem conservative in their operations to guarantee stable and reliable returns. In terms of fundamentals, they look very good, they have a very healthy debt for a bank, a low payout ratio and a very balanced return-on-equity (ROE).
Stock Price: 58.13$
Dividend Yield: 4.0%
Dividend Raise Streak: 15 Years
Typical Yearly Dividend Growth (5yr): 5%