The Big Six Canadian bank stocks have melted down in a big-way this spring. And while the broad basket of big banks may face increased resistance as all-time highs get just a bit closer in sight, I wouldn’t be so quick to take all of one’s profits off the table, not while there are big dividends to be had alongside still-reasonably attractive multiples.
In this piece, we’ll check in on a trio of Canadian bank stocks that may very well be a source of capital gains, dividends, and dividend growth over the next 18—24 months.
Indeed, the bank trade has gone to sleep for some time, and while there’s a good chance a correction could drag them right back to where they spent most of the last four years, I certianly wouldn’t be afraid to initiate a starter position right here as the bank stock’s early summer sizzle looks to extend.
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TD Bank
First up, we have one of the hottest bank stocks so far this year, TD Bank (TSX:TD). The name went from long-time laggard as the firm navigated through a unique crisis (the money-laundering woes) to a huge year-to-date winner. Sometimes it’s the cheap laggards that have fallen flat on their face which can be the biggest comeback players. And while time will tell if TD’s epic rally will last until winter, I certainly wouldn’t be afraid to top up while the name’s timely again.
With a fairly modest 4.3% dividend yield and an incredibly low 10.1 times trailing price-to-earnings (P/E), there’s certainly room to run. As Canada runs into lower rates and new tariff challenges, we’ll have to see how the banks fare. Either way, I view TD as the best bank of the batch going into July. The name has long been a (deep) value play, but nowadays, it’s showing signs that it’s worthy of regaining its premium multiple.
Bank of Nova Scotia
The Bank of Nova Scotia (TSX:BNS) is another bank stock that’s demonstrated surprising strength in the past year. With a towering 5.9% dividend yield and a still-fairly low 15.6 times trailing P/E, Canada’s most international bank stock still appears to be one of the more affordable higher-yielders out there. Indeed, well-supported 6% yields are pretty hard to come by.
With Bank of Nova Scotia hiking its payout steadily through all sorts of market “weather” conditions, there are a handful of reasons to stick with the name as it retests the $77—80 per-share ceiling of resistance. Recently, the big bank got a big vote of confidence from analyst Mario Mendonca, who’s grown a whole lot more upbeat on the name going into 2026.
Notably, Mendonca’s a big fan of the bank’s “conservative posture” and its ability to keep returning capital right back into shareholders‘ pockets via share repurchases and dividend raises. Add the low valuation multiple and swollen upfront yield into the equation, and it’s tough to look elsewhere if you’re in the market for a yield in the ballpark of 6%. Indeed, BNS stock is a passive income kingpin that could act as one of the leaders if the bank stocks do continue their ascent into the back half.
