Better Buy: TD Stock or Bank of Nova Scotia?

Spread the love


Stock research, data analysis

TD (TSX:TD) and Bank of Nova Scotia (TSX:BNSTheir share prices fell in 2022 as interest rates rose and fears of a potential wave of defaults in the mortgage market hit the market in 2023 and 2024. Underrated And a good buy for their portfolios.

Table of Contents

DD Bank

TD (TSX:TD) is Canada’s second largest bank Market capitalization $165 billion. The stock is now trading near $90, up from over $100 at this time last year. TD stock actually dipped as low as $78 in July of last year and has been on an upward trend ever since.

TD is using a war chest of cash built up during the pandemic to make two strategic acquisitions in the US. The moves extend a 20-year pattern of buying regional banks to build a larger U.S. presence. US$13.4 billion purchase of TD The first horizon It will bring more than 400 branches to a network that currently stretches from Maine to Florida. First Horizon operates primarily in southeastern states, so the deal makes geographic sense. Once the acquisition is complete, TD will become the top six banks in the US. As the U.S. economy expands in the coming decades, this should help boost revenue and profit growth.

TT is also spending US$1.3 billion on acquisitions Cowan, an investment bank. The deal expands TD’s capital markets team. This segment has historically paid little attention to TD compared to its peers.

DDT has an excellent track record of dividend hikes with a compound annual growth rate of over 10% over the past 25 years. At current prices, the stock trades at 9.5 times trailing 12-month earnings and offers a dividend yield of 4.25%.

Bank of Nova Scotia

Bank of Nova Scotia is trading at $71 at the time of writing. The stock hit a low of $64 in October and is still down 22% from this point last year. The larger concern centers on Bank of Nova Scotia’s large international operations, located primarily in Mexico, Peru, Chile and Colombia.

The four members of the Pacific Alliance trade bloc offer attractive long-term growth potential. Rising middle-class incomes should drive demand for loans and investment products in this combined market of more than 230 million unbanked customers.

However, geopolitical and economic risks are ever-present in these countries and the threat of a global recession may have caused investors to shun Nova Scotia banks over the past year.

At 8.9 times trailing 12-month earnings, Bank of Nova Scotia looks cheap, and investors can enjoy a 5.8% dividend yield. Bank of Nova Scotia has increased its dividend in 43 of the last 45 years.

Is one the best bet?

TD and Bank of Nova Scotia should continue to grow attractive dividends. TT is probably the safer choice of the two stocks, while contrarian investors who can handle a bit more volatility and investors looking for passive income may want to make Bank of Nova Scotia their first choice. I will split a new investment between two stocks today.

Position Better to Buy: DD Stock or Bank of Nova Scotia? appeared first Motley Fool Canada.

Want to invest $1,000 in a Nova Scotia bank?

Here’s what you should ask before considering Bank of Nova Scotia.

Our team of market-beating analysts revealed what they believe are the 5 best stocks for investors to buy in January 2023… and Bank of Nova Scotia is not on the list.

Motley Fool Stock Advisors Canada, their online investment service for nearly a decade, is underperforming the TSX by 16 percentage points. Now, they think 5 stocks are the best buys.

See 5 stocks
*Returns through 1/9/23

(function() { function setButtonColorDefaults(param, properties, defaultValue) { if( !param || !param.includes(‘#’)) { var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];[property] = defaultValue; } }

setButtonColorDefaults(“#5FA85D”, ‘background’, ‘#5FA85D’); setButtonColorDefaults(“#43A24A”, ‘border-color’, ‘#43A24A’); setButtonColorDefaults (“#fff”, ‘color’, ‘#fff’); })()

Further reading

The Motley Fool recommends Bank Of Nova Scotia. A motley fool Disclosure Policy. Fool Contributor Andrew Walker has no position in any of the stocks mentioned.


Source link

Leave a Comment