Bank of Nova Scotia (TSX: BNS) is one of Canada’s big banks. And while the big banks are almost always seen as good investment options, it behooves us to ask whether investors should see Bank of Nova Scotia as a buy right now.
Let’s look at the case to buy, sell, or hold this big bank stock.
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The case to buy
There are more than a few reasons why investors may want to consider Bank of Nova Scotia a buy.
Like its big-bank peers, Scotiabank boasts a stable domestic market and a juicy dividend. The bank also boasts a growing international presence, which has earned it the moniker of being Canada’s most international bank.
In recent years, Scotiabank’s growth presence has shifted from the more volatile Latin American markets to North American markets.
Scotiabank’s international growth has helped the stock realize impressive gains. It’s also helped fund the bank’s quarterly dividend, which is another key reason to see Bank of Nova Scotia as a buy right now.
As of the time of writing, Scotiabank offers a tasty quarterly dividend with a yield of 5.66%. This means that even a $6,500 investment in the stock will generate enough income to purchase a handful of shares each year through reinvestments.
That fact alone makes Bank of Nova Scotia a buy. Throw in the established annual bump to that dividend, and you have a must-have stock for any well-diversified portfolio.
The case to hold
While the market (and Scotiabank) has performed well this year, there are growing concerns about how much longer those gains will continue. More specifically, a growing sentiment that we’re overdue for a pullback.
To be clear, market pullbacks are a normal part of the investment cycle. If anything, they represent an opportunity to pick up some great stocks at a discounted rate.
Investors who feel that way may want to hold off buying Scotiabank further, at least when we finally see a pullback.
Additionally, those investors opting to hold Scotiabank should recall that juicy dividend mentioned above. Holding and not selling means that investors will continue to receive that juicy yield and the opportunity to reinvest those dividends.
The case to … sell?
Canada’s big banks are almost always considered good buys. As to establishing a case to sell Bank of Nova, there could be a reason to — but that depends on each investor.
As of the time of writing, Scotiabank trades up nearly 25% over the trailing 12-month period. That number extends to gains of nearly 34% when looking at the past five-year period.
For those investors who have shorter investment timelines or those who are looking to take some profits and potentially invest elsewhere, this could be a good moment to sell.
Is Bank of Nova Scotia a buy for your portfolio?
No stock is without risk, and that even includes defensive options like Scotiabank. Fortunately, this is a big bank that checks off many of the boxes for long-term investors.
In my opinion, Bank of Nova Scotia should be a core holding for any well-diversified long-term portfolio.
