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I recently came across a $50B bank north of the border that I had never heard of but which appears to be in good shape and offers a generous yield and low valuation.

Bank of Nova Scotia (NYSE:BNS) – “The Bank of Nova Scotia, together with its subsidiaries, offers various personal, commercial, corporate, and investment banking services in Canada and internationally. It has four segments: Canadian Banking, International Banking, Global Wealth Management, and Scotia Capital. The Canadian Banking segment includes retail and small business banking, which provides mortgages, loans, credit cards, investments, and day-to-day banking products to individuals and small businesses; and commercial banking business that delivers a product suite to medium and large businesses, including banking, cash management, lending, and leasing”. (Business description from Yahoo Finance)

6 reasons BNS is a good buy at $46:

1. Bank of Nova Scotia has good technical support at just under current price levels (See Chart, click to enlarge).

2. Another floor under the stock is its 4.2% dividend yield. It has raised its dividend an average of 4% a year over the past five years, in contrast to U.S. banks that have been forced to cut dividends over the same time period.

3. Canada has a stronger economy and avoided the mortgage mess of the United States which has left its banking sector in much better shape.

4. BNS is showing rapid earnings growth. It earned $3.97 a share in FY2010 and is projected to earn $4.59 this year and $4.89 in FY2012.

5. The bank has a forward PE of just 9.4 which is an over 20% discount to its five year average.

6. It is currently under analysts’ price targets. The median analysts’ price target on BNS is $63 and Credit Suisse has a price target of $62 on the Bank of Nova Scotia.

Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in BNS over the next 72 hours.

Source: Solid Canadian Bank Yielding North Of 4%