The financials industry is full of high-quality, blue chip stocks.
Before showing you an example, it’s important to understand what a blue chip stock really is.
There is no ‘formal’ definition of a blue chip stock that is widely accepted among financial professionals. The term is used to describe high-quality, economically durable companies that are likely to continue profitable operations for a long, long time.
At Sure Dividend, we define a blue chip stock as a company with a 100+ year operating history and a 3%+ dividend yield. These two characteristics mean that:
- The company has a business model that has endured through many market cycles and is likely to last well into the future.
- The business pays a nice dividend, which allows long-term investors to profit without reducing or eliminating their ownership stake.
There are a surprising number of blue chip stocks that meet these criteria, and many of them make strong investments right now.Â
Our blue chip stocks list is not necessarily constrained to companies in the United States.
The Bank of Nova Scotia (BNS) Â is one example of an international issue with robust growth prospects from our blue chip stocks database.
This financial institution – which is most notably known for its strong performance during the 2007-2009 financial crisis and its growing presence in Latin America and South America – is one of the ‘Big Five’ Canadian banks, which form a veritable oligopoly in the Canadian financial services industry.
This article will analyze the investment prospects of The Bank of Nova Scotia in detail.
Business Overview & Current Events
The Bank of Nova Scotia (or Scotiabank, for short) is the third-largest financial institution in Canada, behind:
- The Royal Bank of Canada (RY)
- The Toronto-Dominion Bank (TD)
These three banks along with the Bank of Montreal (BMO) and the Canadian Imperial Bank of Commerce (CM) form the ‘Big Five’ Canadian banks, which have majority of the market share in the Canadian financial services industry.
Scotiabank operates in three primary segments:
- Canadian Banking (51% of 2016 earnings)
- International Banking (28% of 2016 earnings)
- Global Banking & Markets (21% of 2016 earnings)
Scotiabank recently reported financial performance for the second quarter of 2017. The fiscal years of each of the Canadian banks begins on November 1, which means that the end of the second quarter falls on April 30.
Scotiabank’s performance in the quarter was quite strong. Diluted earnings-per-share increased by 11%, in-line with the growth in company-wide net income. This indicates a stable share count.
Other key performance figures include revenue growth of 4% (lower than normal for Scotiabank) and expense growth of 5% (also lower than normal). All said, it was generally a ‘business as usual’ quarter for this bank.
