Bank of Nova Scotia (TSX:BNS), or Scotiabank, is set to report its fiscal second-quarter 2025 (the three months ended in April) earnings on May 27, and for investors looking to make a move, that date could matter. After rallying by nearly 20% in 2024, BNS stock has dipped by 7.5% so far in 2025, but the recent rally in Canadian financials suggests sentiment may be turning.
With easing trade tensions and strong sector performance, Scotiabank stock has risen 12.3% over the last 25 days to currently trade at $71.37 per share with a market cap of $88.9 billion. At this market price, it also offers an attractive 6% annualized dividend yield, paid quarterly. But could this be a great, low-risk entry point for dividend-focused investors?
In this article, let’s look at what’s changed in the macro environment and whether Scotiabank stock deserves a spot in your portfolio ahead of earnings.
Why Scotiabank stock has been on the move
Part of the recent rally in Scotiabank shares can be linked to broader market optimism around the Canadian financials sector. With interest rates gradually easing, bank stocks have found fresh support. The Canadian economy is also showing resilience, and with trade tensions softening, investors are willing to bet on bank stocks again.
In addition, Scotiabank’s recent announcement to exit select Latin American markets and simplify its international operations has sparked fresh interest. The market apparently is seeing this as a shift toward efficiency and refocus, especially in its core North American footprint.
And its relatively high 6% annual dividend yield adds to BNS stock’s appeal. Amid declining interest rates, that kind of dividend payout is hard to ignore, especially for income-focused investors.
Digging into recent results
Scotiabank posted a 4% YoY (year-over-year) jump in its adjusted earnings in the first quarter (ended in January 2025) to $1.76 per share. The key highlight of the quarter was its global banking and markets segment, which posted a 33% earnings surge from a year ago, driven by active capital markets and increased advisory revenues. Similarly, its wealth management impressed investors with a 22% YoY jump in earnings as fee income climbed.
That said, Scotiabank’s Canadian banking arm saw a 6% YoY dip in adjusted earnings last quarter, mainly due to higher provisions for credit losses and expenses. The international banking side also felt a dip but showed encouraging sequential growth.
Why long-term investors should watch closely
With Scotiabank’s next earnings report due May 27, here’s what could matter most for long-term investors. In recent quarters, the Canadian banking giant has made strategic moves, like exiting underperforming regions and deepening focus in North America. Such moves clearly suggest it’s playing the long game. Its capital strength remains solid, which gives it the flexibility to support growth or weather turbulence.
Also, with its ongoing digital transformation and a strong wealth management franchise, the bank’s fundamentals remain strong.
So, if you’re thinking long term, this could be a good time to keep Scotiabank stock on your radar. It might not skyrocket overnight, but for investors seeking stable dividends and steady upside, BNS could be one of the better bets before the Canadian bank earnings season kicks off.
