Canadian dividend investors who missed the recent rally in the TSX are wondering where they can still find good value for a self-directed Tax-Free Savings Account (TFSA) or Registered Retirement Savings Plan (RRSP) portfolio.
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Bank of Nova Scotia
Bank of Nova Scotia (TSX:BNS) moved higher over the past month but is still down 7% in 2025. The stock trades near $71.50 at the time of writing, compared to $80 last fall and was as high as $93 at the peak of the post-pandemic rally in bank stocks.
Falling interest rates in Canada and the United States in the second half of 2024 spurred a bounce in Bank of Nova Scotia and many of its peers as investors started to bet on lower provisions for credit losses (PCL) from the big banks. Cheaper interest rates immediately ease pressure on borrowers with too much variable-rate debt, so the banks should see some relief on potential defaults as long as the economy holds up and unemployment doesn’t surge.
Bank of Nova Scotia gave back most of those gains in the first quarter (Q1) of 2025. The bank’s fiscal Q1 2025 results indicated another increase in PCL, even as rates declined. This likely caused some concern among investors who were hoping for PCL to start to fall. Bank of Nova Scotia also took a $1.355 billion impairment loss connected to the sale of its assets in Colombia, Costa Rica, and Panama. The bank is transitioning its growth focus away from Latin America to the United States and Canada. The overall Q1 2025 results, however, came in strong despite the challenging market conditions.
Near-term uncertainty around trade negotiations between the United States and its neighbours could be a headwind for the stock due to the bank’s large operations in both Canada and Mexico. That being said, trade deals will eventually get done. Contrarian investors with a buy-and-hold strategy can currently get the stock at a reasonable price and pick up a solid 5.9% dividend yield while they wait for the turnaround plan to deliver results.
Canadian Natural Resources
Canadian Natural Resources (TSX:CNQ) is Canada’s largest energy company, with a current market capitalization of nearly $89 billion. This gives CNRL the financial clout to make large strategic acquisitions to boost revenue and reserves. For example, CNRL spent US$6.5 billion in 2024 to buy Chevron’s Canadian assets in a move that should deliver solid long-term returns for investors.
The stock is down 19% in the past year due to falling oil prices. West Texas Intermediate (WTI) oil trades near US$62 per barrel right now compared to more than US$80 last year. Natural gas prices are doing better, however, and this helps CNRL offset some of the margin hit on the oil assets. CNRL is also boosting output to drive more revenue. The company says its WTI breakeven price is roughly US$40 to US$45 per barrel, so CRNL is still very profitable at the current oil price.
The board raised the dividend earlier this year, marking the 25th consecutive annual hike. Analysts expect oil prices to face headwinds through 2026, but a major geopolitical event in the Middle East could easily send oil prices soaring.
Investors who buy CNQ stock at the current level can get a dividend yield of 5.5%.
The bottom line
Bank of Nova Scotia and CNRL pay attractive dividends that should continue to grow. If you have some cash to put to work, these stocks deserve to be on your radar.
