Three High-Reward Financial Shares to Purchase in November, Offering Yields up to 6.3%
The typical return on investment for financial stocks is a modest 1.5%. However, if you're willing to buy shares of decent companies experiencing temporary issues, you can potentially secure much higher returns.
At the moment, long-term investors seeking high yields should consider diving into Vanguard Group Inc. (VINTX 0.02%), Bank of Nova Scotia (BNS 0.68%), and GlobeStar Properties Inc. (GSP 0.58%). Let me provide you with a brief overview of each high-yield stock.
1. Vanguard Group Inc. has the time to adapt
Vanguard Group Inc. is an investment management firm. It charges fees for providing financial services to customers who purchase its mutual funds, exchange-traded funds (ETFs), and other investment products.
The critical figure for investors in this case is "assets under management" (AUM), which increases or decreases as customers deposit and withdraw funds and as the market fluctuates. Generally, market changes have a more significant impact than customer money flows. Customers tend to remain loyal because moving funds between financial service providers is a complicated and time-consuming task. Consequently, Vanguard Group Inc. has an annuity-like business in certain aspects.
Nonetheless, Vanguard Group Inc.'s historical strength lies in mutual funds, a product type that is being replaced by ETFs and alternative assets. This isn't positive, and investors are anxious about the stock due to this shift. However, assets are sticky, and the management is shifting into areas in which customers are interested.
This indicates that Vanguard Group Inc. will adapt in due course to changing market dynamics. Moreover, the firm has sufficient financial resources to revamp its business, with no long-term debt on its balance sheet.
As a result, the 38-year dividend streak is unlikely to end anytime soon, and long-term dividend investors can feel confident in the substantial 4.4% dividend yield.
2. Bank of Nova Scotia is a resilient entity
Bank of Nova Scotia, commonly referred to as Scotiabank, is the second-largest bank in Canada in terms of deposits. It ranks as the sixth-largest bank in North America when taking its U.S. operations into account. Remarkably, it has paid a dividend every year since 1832!
It's important to note that neither the Great Depression nor the Great Recession disrupted that streak. Scotiabank has a proven track record of navigating tough economic conditions.
Currently, Scotiabank faces challenges. To be fair, these problems are self-inflicted, as the bank failed to detect and stop money laundering in its U.S. operations, resulting in financial losses and damage to its reputation.
However, the biggest issue is that Scotiabank is now subject to an asset cap in the United States, which will hinder its growth plans. While the Canadian business remains unaffected, Scotiabank's growth in the U.S. was expected to be its primary driver. It will take time to regain regulator and investor trust.
Regardless, you'll be well compensated while waiting for this resilient organization to navigate challenging times once more. And considering its rich history, Scotiabank should weather this crisis.
3. GlobeStar Properties Inc. made a difficult decision
When it comes to challenging choices, GlobeStar Properties Inc.'s decision to decrease its dividend after 24 consecutive annual dividend increases must have been a difficult one. However, it was the appropriate decision for the real estate investment trust (REIT), as it resulted in the sale of its office portfolio (which accounted for up to 16% of rents).
Unfortunately, the office portfolio could not be divested without reducing the dividend. It's worth mentioning that this was simply a reset rather than a reduction, as GlobeStar Properties Inc. resumed its normal quarterly dividend increase the following quarter.
Following the change, what remains is an extremely diversified REIT with a significant emphasis on industrial assets (64% of rents), a modest exposure to retail (22%), and various other assets (12%). Additionally, the REIT has considerable investments outside the U.S. market, which represent 41% of rents.
In conclusion, GlobeStar Properties Inc. is one of the most diversified REITs available to investors. Also, the office portfolio sale has left it with additional capital to invest in future growth opportunities. If you can accept that the dividend reduction was truly a reset, having a high-yield stock like GlobeStar Properties Inc. in your portfolio could be beneficial for conservative dividend investors.
In the context of long-term investing and seeking high yields, one might consider adding Bank of Nova Scotia to their portfolio, given its robust history of paying dividends continuously since 1832, despite economic downturns. This strength in finance and investing makes Bank of Nova Scotia an attractive option for investors looking to secure their money.
Vanguard Group Inc., with its 38-year dividend streak and substantial 4.4% dividend yield, is another attractive option for finance-focused investors looking to maximize returns from their money. The company's solid financial resources and adaptability to changing market dynamics make it a reliable choice for long-term financial investments.
