Business & Investment

Why Scotiabank shares continue to be the top pick in September

Investors will neglect to ignore Canadian banks when talking about top Dividend stock Now at TSX. And in this regard Nova Scotiabank (TSX: BNS)(NYSE: BNS), Or Scotiabank stocks certainly look attractive now.

The economy is recovering and Scotiabank shares appear to be poised to outperform in the medium term. For those who are bullish on the ongoing recovery, this is one of my top picks in September.

Let’s take a closer look at why Scotiabank shares are coming to a strong end of the month.

Scotiabank shares have room to outperform their peers

Scotiabank’s relatively flat performance since March indicates that this is a stock that may not go anywhere. Some investors may see Scotiabank’s high dividend yield and relatively low valuation as a reason to consider other “surviving” Canadian bank stocks. But in my view, this attractive valuation and yield is the main reason to consider Scotiabank shares.

Scotiabank’s share price is currently almost flat over the last six months, but on a year-to-date basis, it remains flat. Approximately 15% increase.. Since its lows in March, Scotiabank has seen remarkable growth, especially for investors who have been able to secure high yields.

I believe that stable housing markets and a strong economic recovery in the medium term should be good signs for Scotiabank stocks. Sure, things can turn sideways — it’s always a risk. But bulls on the future of the Canadian (and global) economy cannot make mistakes with Scotiabank stocks.

Baskets at other major Canadian banks have increased by more than 25% year-to-date, suggesting a performance gap between Scotiabank and its peers. I think this gap is unjustified so far. In addition, I think Scotiabank has a better business model than its peers for several reasons.

Bank of Nova Scotia’s earnings remain strong

This strong business model has been reflected in otherwise strong earnings during the company’s recent third quarter release. Adjusted revenue was $ 2.56 billion. This allowed Scotiabank to raise its common stock Tier 1 ratio to 12.2% last quarter. This means that Scotiabank has sufficient capital to handle economic fluctuations from here.

In addition, we can see more in terms of the reduction in the allowance for doubtful accounts that boosts the return on Scotiabank shares. Over the next few quarters, the expected strength of Scotiabank’s commodities and other core lending sectors should remain strong.

In addition, digital adoption, increased operational efficiency, and increased non-interest income may also drive Scotiabank’s income. This allows financial institutions to pay a healthier dividend yield.

Conclusion

Scotiabank shares remain a major beneficiary of improving macroeconomic conditions. This is a company with good growth prospects and stable (and relatively high) dividend yields.

These factors are very important for long-term investors. Sure, this is one of my top picks in September for a reason.

This article represents the opinion of a writer who may disagree with the “official” recommendation position of the Motley Fool Premium Services or Advisors. We are Motley! Asking investment treatises, even our own treatises, can help you think critically about your investment and make decisions to be smarter, happier, and richer. As a result, we may publish articles that may not match recommendations, rankings, or other content. ..

Stupid contributor Chris McDonald does not have a position in any of the shares mentioned. Motley Fool recommends BANK OF NOVASCOTIA.

Why Scotiabank shares continue to be the top pick in September

https://www.fool.ca/2021/09/16/why-scotiabank-stock-remains-a-top-pick-in-september/ Why Scotiabank shares continue to be the top pick in September

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