The Globe and Mail reports in its Wednesday edition that investors concerned about market unpredictability may want to take a middle-of-the-road approach, selecting investments that pay dividends but also have the potential for modest capital growth. The Globe's guest columnist Joel Schlesinger writes that TriDelta manager Lorne Zeiler says investor interest in Canadians banks waned in 2018 when the sector fell about 10 per cent. Investors may have soured on them, but the big banks are still reporting record earnings, says Mr. Zeiler. What is more is their share prices are down from their peaks, offering good value for investors buying today.
The Bank of Nova Scotia looks the most attractive, Mr. Zeiler suggests, "trading at only approximately nine times forward earnings with a nearly 5-per-cent dividend yield." Yet while Scotiabank -- and all the big banks for that matter -- offers plenty of upside, more interest rate hikes coupled with deepening economic malaise could hurt the sector's bottom line.
That said, the banks are well capitalized and should easily withstand negative economic conditions while maintaining "strong cash flows that translate into high, growing dividend yields," says Mr. Zeiler.
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