The Motley Fool... article Bank of Nova Scotia trades near $64 per share at today's close compared to $95 at the peak in early 2022. The huge pullback gives investors a chance to buy BNS stock at an attractive 7.7 times trailing 12-month earnings and lock in a 6.4% dividend yield. This is a good return from a Canadian bank, and investors with a buy-and-hold strategy should see decent total returns on the investment in the coming years.
Bank stocks are under pressure due to rising recession fears. The Bank of Canada and the U.S. Federal Reserve are raising interest rates in an effort to cool off the economy and drive down inflation to the 2% target. To meet the goal, some economic pain is expected, and economists are trying to figure out if there will be a short and mild recession or a deep and prolonged one.
At this point, savings remain elevated, and the jobs market continues to be robust. As long as there isn’t a major spike in job losses and a big surge in unemployment, the economy should see a relatively soft landing. In the event things turn out to be worse than expected, Bank of Nova Scotia has the capital strength to ride out a downturn.
The board raised the dividend by 11% near the end of last year and hiked the payout by another 3% when the bank announced the fiscal Q2 2022 results. This would suggest the management team is comfortable with the earnings outlook, even considering the economic headwinds.