Escalating global trade tensions have added uncertainty to the Canadian stock market in early 2025. While the TSX Composite Index surged 3.3% in January, it has since slipped 1.6% in February as investors react to shifting trade policies.
Despite these short-term concerns, the expectation of more interest rate cuts could provide a much-needed boost to key sectors like financials, making now a great time to invest in high-quality dividend stocks. In this article, I’ll highlight two Canadian bank stocks that offer not only strong long-term growth potential but also reliable passive income, helping you turn your savings into a long-term wealth-building powerhouse.
TD Bank stock
If you’re serious about turning your savings into a passive-income powerhouse, Toronto-Dominion Bank (TSX:TD) is a stock that can’t be ignored. As one of Canada’s largest banks, TD serves millions across North America with personal and commercial banking, wealth management, and investment services.
After rallying by nearly 13% year to date, TD stock currently trades at $86.28 per share with a market cap of $152.3 billion. For income-focused investors, its 4.9% annualized dividend yield makes it even more attractive.
Despite facing some headwinds in 2024, TD Bank came into 2025 with strong financials. In its latest quarter ended January 2025, the bank’s revenue rose 2.4% YoY (year over year) to hit $14.05 billion. TD Bank posted an adjusted net income of $3.6 billion for the quarter. Its Canadian personal and commercial banking segment set a new revenue record with the help of strong loan and deposit growth.
Moreover, TD Bank is continuing to expand its digital banking services, strengthening credit card partnerships, and investing in artificial intelligence-driven financial tools to improve customer experience. The bank recently managed to resolve regulatory challenges in the U.S., which could unlock even more growth potential.
With interest rate cuts expected to further boost lending activity in Canada and TD’s strong dividend history, this top Canadian stock offers the perfect mix of passive income and long-term growth potential.
National Bank of Canada stock
National Bank of Canada (TSX:NA) could be another strong stock for turning your savings into a reliable income stream while offering solid growth potential. It provides a full range of financial services across Canada.
After climbing by 16% over the last year, NA stock currently trades at $120.01 per share with a market cap of $47.3 billion. At this market price, it has an annualized dividend yield of 3.8%.
In the first quarter of its fiscal year 2025 (ended in January), the bank delivered impressive numbers, with its net income rising 8% YoY to $997 million. Similarly, National Bank’s revenue saw a strong 17% increase last quarter to $3.18 billion. This growth was mainly driven by a 23% net income growth in its wealth management segment and a 35% growth in the financial markets segment due to higher fee-based revenue and strong global market activity.
Moreover, National Bank’s recent acquisition of Canadian Western Bank could act as a key driver of its future growth, which expands its presence nationwide. With a disciplined approach to risk and a history of steady dividend payouts, National Bank offers a great mix of passive income and long-term growth potential for investors looking to build wealth in the long run.
