The market pullback is giving Canadian investors a chance to buy good dividend stocks at cheap prices for a self-directed Tax-Free Savings Account (TFSA) focused on passive income.
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Bank of Nova Scotia
Bank of Nova Scotia (TSX:BNS) went from $62 per share in August to $80 in early December last year. Since then, the stock has given back most of the gains and currently trades near $66.
Worries about a possible recession in Canada and the United States put pressure on bank stocks in the past few weeks. Tariff announcements and trade war threats are expected to continue for some time until the United States works its way through negotiations with all of its trading partners, including Canada and Mexico, where Bank of Nova Scotia has a large presence.
Weakness in BNS stock this year might also be due to the large charge the bank took on the sale of its businesses in Colombia, Costa Rica, and Panama. Bank of Nova Scotia is moving away from putting more capital into its Latin American operations, with Mexico, Peru, and Chile being the largest remaining parts of that portfolio. Investors might be concerned that additional monetization of the businesses could come with losses on the investments.
Bank of Nova Scotia is looking to the United States and Canada to drive growth in the next few years and is already making moves under the new chief executive officer. The bank spent US$2.8 billion in 2024 to buy a 14.9% stake in KeyCorp, an American regional bank. Bank of Nova Scotia also created a new executive position to lead an expansion in Quebec.
It will take time for the turnaround efforts to deliver results, but the stock might be oversold at this point and provides a dividend yield of 6.4%.
Canadian Natural Resources
Canadian Natural Resources (TSX:CNQ) is down 9% in 2025 and lost 23% of its value in the past year as of the time of writing.
Weak oil prices are to blame for most of the damage. West Texas Intermediate (WTI) oil was above US$80 per barrel a year ago. Today WTI is around US$64 and recently slipped below US$60. A struggling Chinese economy and supply growth in non-OPEC countries, including Canada and the United States, put pressure on oil prices through the second half of 2024. The 2025 story is about trade wars and recession fears in the United States, as well as continued economic weakness in China.
These narratives could persist for several months, and it wouldn’t be a surprise to see WTI slide back to the 12-month low if recession fears pick up momentum.
That being said, CNRL remains profitable at current oil prices and pays an attractive dividend that should continue to grow. The board raised the distribution in each of the past 25 years. Energy bulls who buy CNQ stock at the current level can get a dividend yield of 5.8%.
The bottom line on high-yield stocks for passive income
Bank of Nova Scotia and CNRL pay attractive dividends that should continue to grow. If you have some cash to put to work in a TFSA targeting passive income, these stocks deserve to be on your radar.
