The Canadian bank stocks have been picking up steam, and it’s about time. Though rock-bottom valuations have come and gone, at least for the Big Six basket, I still think there’s an opportunity to score decent value and a solid, growing dividend as the big banks look to finish off the year with strength.
Personally, I think there’s no reason to be skeptical of the banking bull run we’ve had in the past year. In fact, I think things could pick up speed going into 2026, especially as the big banks operate at a higher level while tech-driven efficiencies look to come into play, something that I described in prior pieces.
In this piece, we’ll have a quick look at two of the cheaper banks that may be worth picking up as we roll into mid-September. While shares are hovering close to their 52-week highs (or all-time highs), I wouldn’t be afraid to buy now instead of trying to time a pullback.
At the end of the day, valuations just make sense, and with improving fundamentals as well as a cautiously optimistic guide delivered by various analysts, I like the setup from here. Here are some of the banks that don’t get as much respect, given their past-year runs.
Laurentian Bank of Canada
Laurentian Bank of Canada (TSX:LB) may not be a part of the Big Six (it’s far smaller than them, with a mere $1.4 billion market cap), but it has shown some impressive strength in recent months, soaring over 21% in the last six months. While shares are still a far cry away from their prior all-time highs, I wouldn’t be surprised if prior highs (now 29% away) were to be revisited at some point within the next two to three years, especially if Laurentian can continue posting decent results. The latest third-quarter numbers were decent, but not incredible by any means.
As the firm continues executing on its strategic turnaround plan, I like the stock as a long-term value hold. Shares trade at just 10.5 times trailing price-to-earnings (P/E) to go with a 6% dividend yield. If the turnaround goes well (and I think it will), the stock may just outperform its much-larger peers in the Big Six. Either way, Laurentian has been through a lot, and 2025 marked a turning of the corner, in my view.
National Bank of Canada
As number six of the Big Six banks, National Bank of Canada (TSX:NA) doesn’t get as much media coverage as its larger five brothers. Still, I think it’s a top-tier bank that’s worth buying and holding for its dividend growth. The 3.2% yield is on the small end, and the 14.5 times trailing P/E isn’t the best of the Big Six.
However, I do view National Bank as having more room to grow. As such, a higher multiple seems deserved. Though shares haven’t been as hot this year, gaining 13% year to date, I do think the long-term trend is impressive, with shares soaring more than 240% in the past decade. That’s an impressive gain for a bank. My takeaway? NA stock is still a buy for premier dividend growth and capital gains potential for the next five years.
