TFSA Investors: Buy This Top Bank Stock for High-Yielding Dividends

Generate a superior passive-income stream by investing in this high-yielding dividend stock from Canada’s Big Six banks.

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Stock market investing in Canada opens up plenty of doors for you to make money. From high-risk and high-growth tech stocks to low-risk utility businesses, there is something for investors with every risk-tolerance level to consider. Dividend investing is an excellent way to keep getting returns from your investment in the stock market, regardless of whether there is a downturn.

When you invest in high-quality dividend stocks, you get returns through capital gains and shareholder distributions paid by the underlying company. The top Canadian bank stocks feature some of the best dividend stocks trading on the TSX.

Today, we will look closely at a bank stock paying unusually high-yielding dividends to its investors to help you determine whether it can be a good investment.

Investing in Canadian bank stocks

Canada’s Big Six banks have long been seen as excellent long-term investments. Today, the statement holds true for Bank of Nova Scotia (TSX:BNS) and its peers. The Canadian banking sector has shown overall better health than its counterpart across the border. The top Canadian bank stocks enjoy a mature domestic banking segment, generating stable revenues.

Solid operations and fundamentals allow these bank stocks to pay shareholder dividends without fail. Several Canadian bank stocks have paid dividends regularly for over a century and a half. Scotiabank is nearing the two-century mark of regular dividend payouts. For long-term investors, Canadian bank stocks have been a reliable asset to buy and hold for wealth growth.

Between steady long-term capital gains and regular dividend payouts, Canadian bank stocks like Scotiabank are obvious mainstays in many self-directed investment portfolios.

As of this writing, Scotiabank stock trades for $60.13 per share, down by 19.19% from its 52-week high. At current levels, its shareholder payouts have become inflated to a massive 7.08% dividend yield. If you are an income-seeking investor looking for superior returns on your investment in the long run, Scotiabank stock can be an excellent pick.

Foolish takeaway

Scotiabank’s declining share prices are more due to the overall condition of the economy than the financial institution’s performance. As mounting inflationary pressures and high interest rates have affected the economy, share prices across the board have declined. An improvement in the domestic economy will come with a recovery that will likely see Scotiabank stock shares soar.

Scotiabank’s solid domestic banking segment is not the only reason to consider investing in it. It is also one of the Big Six banks with significant international banking exposure. Scotiabank has expanded into the Latin American market through the Pacific Alliance trade block countries, namely Mexico, Peru, Chile, and Columbia.

By establishing a banking network in each trade block country, Scotiabank is positioning itself to help improve trade between the member countries. In turn, Scotiabank has already placed itself as a trusted banking partner in the region. As the pace picks up in this international market, Scotiabank stock will likely see its performance improve.

If you buy and hold shares of this stock in a Tax-Free Savings Account, you can see the value of your investment grow without incurring income or capital gains taxes for decades.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Adam Othman has no position in any of the stocks mentioned. The Motley Fool recommends Bank Of Nova Scotia. The Motley Fool has a disclosure policy.

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