BNS Trades at a Discount For a Very Good ReasonI am not a fan of CEOs with no Banking background, and this one isn't changing my mind any. That said, the board is never going to let him reduce the dividend unless compelled to by regulators, and there is no reason for the regualtors to do that. For a great many years, BNS has lagged the total returns of most of the big 5, and is WAY behind RBC and TD. Quality of leadership and their operating results are what drives this. The whole, buy the undervalued, reversion to mean, and all that other stuff only works if the reason for the undervaluation is a temproary issue, and not a decades long systemic problem. Just look at Manulife and Laurentian Bank for other great examples of systemic mismanagement.
Dividends are great but I am not about to trade capital growth, let alone capital depreciation, for a 7% dividend. I hold large postions in RBC and TD, smaller in National Bank, and NONE in BNS, CIBC, BMO or Laurentian.
For longterm holds I always buy the best run one or two companis in each sector, and that pays off far better than betting on turnarounds.