Canada’s big banks are great long-term holdings. That’s because they offer reliable revenue, intriguing growth prospects and pay out generous dividends. But in the face of market volatility, should investors buy, sell or hold bank stocks in 2025?
Let’s try to answer that buy, sell or hold question by taking a closer look at one big bank stock: Bank of Nova Scotia (TSX:BNS).
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Meet Scotiabank
Scotiabank isn’t the largest of Canada’s big banks, but it is the most international of the big banks. Over the past decade, Scotiabank has focused on growing its presence in international markets, particularly Latin America.
Those targeted high-growth markets (which overlapped nicely with the Pacific Alliance trade bloc) provided Scotiabank with significant growth. Specifically, in the first two years of the pandemic, the stock price shot up a whopping 106%.
That being said, once markets began to reopen and secondary waves of closures hit developing markets, they were slower to react. This led to a gap between the performance of Scotiabank and its peers over the following year.
Fast forwarding to this year, and Scotiabank has instituted some change. The bank is now going to be focusing on the U.S. and Mexican markets for its international growth portfolio. An example of this is Scotiabank’s acquisition of a stake in U.S.-based lender Keycorp over the summer in a deal worth US$2.8 billion.
That impressive growth potential will help answer the question of whether to buy, sell, or hold Scotiabank for some.
Here’s why investors really love Scotiabank
One of the main reasons why investors continue to flock to Scotiabank is for the dividend that the company offers. Scotiabank has been paying out handsome dividends to investors without fail since 1833.
That’s an insane amount of time that spans multiple wars, as well as every boom and bust period for nearly two centuries.
As of the time of writing, Scotiabank’s quarterly dividend carries a very appetizing yield of 5.65%. This makes the bank one of the highest-paying yields among its big bank peers, if not the entire market.
In terms of earnings potential, that yield means that a $40,000 investment in Scotiabank (as part of a larger, well-diversified portfolio) will earn an income of over $2,250.
Even better, that income does not include growth or the expected near-annual uptick to that dividend which Scotiabank has provided to investors going back for well over a decade.
In other words, Scotiabank is a great income stock to buy now and forget about for decades. That also affirmatively answers the buy, sell, or hold question for income investors, too.
Will you buy, sell, or hold Scotiabank stock?
Even a defensive stock like Scotiabank carries some risk. That’s why the importance of diversifying cannot be understated enough. Fortunately, Scotiabank offers investors both a defensive (and, more importantly, stable) domestic arm as well as a growth-focused international presence.
Throw in one of the best dividends on the market, and you have one of the best-long-term options for any portfolio.
In my opinion, a position in Scotiabank should be a core holding for any well-diversified portfolio. Buy it, hold it, and watch it grow in 2025 and beyond.
