What Makes The Bank of Nova Scotia (TSE:BNS) A Great Dividend Stock?

There is a lot to be liked about The Bank of Nova Scotia (TSX:BNS) as an income stock, over the past 10 years it has returned an average of 4.00% per year. The company is currently worth CA$94.93B, and now yields roughly 4.16%. Let's dig deeper into whether Bank of Nova Scotia should have a place in your portfolio. See our latest analysis for Bank of Nova Scotia

5 questions to ask before buying a dividend stock

If you are a dividend investor, you should always assess these five key metrics:

• Does it pay an annual yield higher than 75% of dividend payers?
• Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?
• Has dividend per share risen in the past couple of years?
• Is it able to pay the current rate of dividends from its earnings?
• Will the company be able to keep paying dividend based on the future earnings growth?

Does Bank of Nova Scotia pass our checks?

The company currently pays out 45.30% of its earnings as a dividend, according to its trailing twelve-month data, which means that the dividend is covered by earnings. Going forward, analysts expect BNS's payout to remain around the same level at 45.98% of its earnings, which leads to a dividend yield of 4.32%. Furthermore, EPS should increase to CA$7.14. Reliablity is an important factor for dividend stocks, particularly for income investors who want a strong track record of payment and a positive outlook for future payout. BNS has increased its DPS from CA$1.88 to CA$3.28 in the past 10 years. During this period it has not missed a payment, as one would expect for a company increasing its dividend. These are all positive signs of a great, reliable dividend stock. In terms of its peers, Bank of Nova Scotia produces a yield of 4.16%, which is high for Banks stocks but still below the market's top dividend payers.

Next Steps:

With these dividend metrics in mind, I definitely rank Bank of Nova Scotia as a strong income stock, and is worth further research for anyone who considers dividends an important part of their portfolio strategy. Given that this is purely a dividend analysis, you should always research extensively before deciding whether or not a stock is an appropriate investment for you. I always recommend analysing the company's fundamentals and underlying business before making an investment decision. I've put together three pertinent factors you should further research:

1. Future Outlook: What are well-informed industry analysts predicting for BNS’s future growth? Take a look at our free research report of analyst consensus for BNS’s outlook.
2. Valuation: What is BNS worth today? Even if the stock is a cash cow, it's not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether BNS is currently mispriced by the market.
3. Other Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.

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Simply Wall St analyst Simply Wall St and Simply Wall St have no position in any of the companies mentioned. This article is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.