After selling my position in the Bank of Nova Scotia ("BNS") over the summer to finance an investment in Kinder Morgan Inc, I used my Q4 contribution to my investment account to re-establish my investment in BNS. I know it's not quite Q4, but given the record date for BNS's dividend is October 2nd, and since it seems to take four business days for trades to settle on the TSX, I made my quarterly portfolio contribution early in order to re-establish my position in BNS. Here are a few reasons I feel so comfortable investing in BNS.
- Relatively low P/E of 12X in this highly priced market
- A fair dividend rate of 3.7X coupled with a dividend growth rate of 10% in the last year (and an average growth rate of about 10% over the past 5 years).
- High barriers to entry given the duopoly banking industry in Canada.
- Gives me some exposure to Latin America through BNS's operations in that region.
Lastly, with my plan to slowly move my Canadian holdings from my RRSP to my taxable account, this re-investment follows-through with my plan. Although it's only two-thirds of the total number of shares I held in my RRSP, if I can scrimp together some extra money in Q4, I plan to buy some more shares in order to re-establish my initial position.
(Full Disclosure: Long BNS and KMI)