Q: Wanting to sell one of these to deploy cash to deploy elsewhere. Which of these two has the best pathway forward for a 2 to 3 year hold and which might you recommend to sell and why? Thank you.
5i Research Answer:
We like both names, and both companies are valued similarly, although BNS has a much greater focus on dividends (6.6% yield) than MG (2.6% yield). MG has higher volatility, and its industry is much more cyclical than BNS. Scotiabank is also much larger and has more of a solid footing in the Canadian economy. Over the past five and 10 years, MG has slightly outperformed BNS, however, if we had to choose between the two, given a combination of stability, conservatism, and growth outlook, we would give BNS the edge here today.