National Bank of Canada’s Q4 Earnings Are Out: What Should You Do Now? | The Motley Fool Canada

National Bank of Canada’s Q4 Earnings Are Out: What Should You Do Now? | The Motley Fool Canada: National Bank of Canada (TSX:NA), one of Canada’s largest financial institutions, It was a solid quarter overall for National Bank, and the dividend increase amplified the positive sentiment, so I think its stock has responded correctly by moving higher. I also think the stock will continue higher from here and that it represents a very attractive long-term investment opportunity today, because it still trades at inexpensive valuations and because it has a high dividend and is dividend-growth play.

First, National Bank’s stock still trades at just 9.4 times fiscal 2015’s adjusted earnings per share of $4.70 and only 9.3 times fiscal 2016’s estimated earnings per share of $4.78, both of which are inexpensive compared with its five-year average price-to-earnings multiple of 10.2 and the industry average multiple of 13.

It also trades at a mere 1.57 times its book value per share of $28.26, which is a very inexpensive compared with its market-to-book value of 2.05 at the end of fiscal 2014 and its five-year average market-to-book value of 1.88.

Second, National Bank now pays an annual dividend of $2.16 per share, which gives its stock a bountiful 4.9% yield, and this is more than double the industry average yield of 2.3%. It is also important to note that the increase it just announced puts the company on pace for 2016 to mark the sixth consecutive year in which it has increased its annual dividend payment, making it one of the top dividend-growth plays in the banking industry.

With all of the information provided above in mind, I think National Bank of Canada represents one of the best long-term investment opportunities in the market today. All Foolish investor should strongly consider making it a core holding."



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