You’re Richer Than You Think if You’re Investing in This Dividend Stock

bulb idea thinking

Image source: Getty Images

Written by Amy Legate-Wolfe at The Motley Fool Canada

If you’re reading this title, it’s likely you already know about the dividend stock that I’m about to discuss. Bank of Nova Scotia (TSX:BNS) certainly can make many Canadians richer than they think, especially if they’re investing in the company.

That being said, this will only be the case for long-term investors. The short term still looks bearish for the dividend stock, with a lot of hurdles to overcome as we come out of this downturn. But there are strong long-term reasons as well. So, let’s get into them, and what investors could achieve if they invest in this dividend stock on the TSX today.

More and more

If you’re looking for a company offering investors more growth, this is certainly the one to consider. The dividend stock offers Canadians growth because it invests quite heavily in emerging markets. These are countries that could provide potentially higher growth rates compared to developed markets. This can lead to higher returns over a long period of term.

Specifically, investors in Scotiabank stock will get exposure to not just Canada but Latin America — particularly countries like Mexico, Peru, Chile, and Colombia. This area can provide resilience against economic downturns in any one region, as we’re even seeing right now.

Of course, this also comes with its own geopolitical risks and tensions. But with an expanding middle class and more growth in these areas, Scotiabank stock has grown its investments in the areas, specifically in Mexico, which could also be why the company is making a bit of a comeback.

Comeback from earnings

A great way to identify when a company is a good investment is by looking at earnings reports. But instead of looking year after year, I would consider looking quarter after quarter. This can show an investor whether the dividend stock is achieving strong momentum.

In particular, during a downturn, investors will want to see whether net income and revenue are growing. So, let’s see how the last three quarters have done for Scotiabank stock.

During the third quarter, the company achieved $2.212 billion in net income, with revenue of $8.09 billion. The fourth quarter hit $1.385 billion in net income, with total revenue of $8.3 billion. By the first quarter of this year, the dividend stock was back to $2.12 billion, with total revenue even higher at $8.433 billion.

This shows that the stock is certainly bringing in more cash and that net income is steadily rising as well. The decrease likely came from increases in provisions for loan losses, which rebounded quickly by the next quarter, making it a great time to get in on the growth.

Value to be had

So, not only are you getting in on growth for the dividend stock, but there is value to be had. Scotiabank stock trades at 10.71 times earnings, with a dividend yield of 6.38%. Furthermore, shares are still down from 52-week highs but have risen 20% since the October market bottom.

All in all, a little can go a long way with this dividend stock, and it could make investors richer than they think possible with just one investment.

The post You’re Richer Than You Think if You’re Investing in This Dividend Stock appeared first on The Motley Fool Canada.

Before you buy stock in Bank of Nova Scotia, consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Bank of Nova Scotia wasn’t one of them. The 10 stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 … if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $15,578.55!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 32 percentage points since 2013*.

See the 10 stocks * Returns as of 3/20/24

More reading

Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool recommends Bank Of Nova Scotia. The Motley Fool has a disclosure policy.


Source link

Check Also

Palantir’s Stock Is Soaring. Is Now the Time to Buy?

Palantir’s stock had a strong run-up in 2024. Palantir (PLTR 1.23%) has had a phenomenal …

Leave a Reply

Your email address will not be published. Required fields are marked *