Canadian banks have delivered steady returns over the past year, thanks to falling interest rates and a resilient economy. Bank of Nova Scotia (TSX:BNS) stock has surged almost 25% since November 2024 and is up 60% in the past decade. After we adjust for dividend reinvestments, cumulative returns are closer to 170% since November 2015.
Despite these inflation-beating returns, BNS stock offers shareholders a tasty dividend yield of 4.7%, given its payout of $4.32 per share in fiscal 2025 (ended in October 2025). So, to earn $1,000 in annual dividends, you need to own 232 shares of BNS worth $21,960.
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY |
| Bank of Nova Scotia | $94.65 | 232 | $1.08 | $250.56 | Quarterly |
In 2015, BNS stock paid shareholders an annual dividend of $2.72 per share. Therefore, you would need to purchase 368 shares of the banking giant, valued at $22,313. to earn $1,000 in annual dividends. Today, 368 shares of BNS would help you earn $1,736 in annual dividends, enhancing the yield at cost to almost 8%.
Let’s see if BNS stock is still a good buy right now.
The bull case of investing in BNS stock
Bank of Nova Scotia reported solid third-quarter results, which sent the stock surging 7%, marking its biggest single-day gain since May 2020.
The Canadian bank is seven quarters into a strategic transformation focused on customer primacy and shifting from volume-based growth to value-driven relationships. This approach is starting to pay off as the bank demonstrates its ability to optimize the balance sheet while still driving revenue growth across key business segments.
The commercial bank maintained its loan levels while its pretax pre-provision profit increased. Global Banking and Markets reduced its balance sheet by 14%, yet it saw fees jump 29%.
International Banking has grown its income and improved the return on equity by 350 basis points over the past two years, despite a relatively flat balance sheet. This optimization lays the foundation for profitable growth ahead as Scotiabank works toward meeting its medium-term targets set at its investor day.
Canadian Banking showed signs of improvement after years of underperformance compared to its peers. The division currently has a return on equity (ROE) gap of approximately 500 basis points compared to its competitors, and management is addressing this through enhanced service, improved sales effectiveness, and product innovation.
Its deposit market share in day-to-day banking rose 70 basis points year over year, while savings grew by $1.6 billion. The small business segment is expanding at twice the market rate, although the bank still ranks fifth in this segment, compared to RBC, which is number one.
Credit quality delivered positive surprises in the quarter as impaired loan provisions came in below guidance, driven by improvements in the Canadian retail book. The auto portfolio showed significant improvement as problem cohorts from 2022 and 2023 age out of the system.
Management expressed confidence that impaired provisions will decline throughout 2026, though it maintained a cautious stance for the fourth quarter given ongoing trade uncertainty.
International Banking continues its transition from volume to primacy, segmenting clients into affluent and high-net-worth categories while building out cash management capabilities.
The bank completed its exit from Central America and Colombia, merged operations into Davivienda, and sold its CrediScotia microfinance business in Peru. Management expects modest growth to resume in 2026 now that this optimization phase is largely complete, with expansion coming from both assets and liabilities.
Is BNS stock still undervalued?
BNS stock is forecast to expand adjusted earnings from $6.47 per share in fiscal 2024 to almost $10 per share in fiscal 2029. In this period, its dividend per share is projected to increase from $4.24 to $4.87.
If BNS stock is priced at 12.5 times forward earnings, which is similar to its current multiple, it should gain over 33% over the next three years. If we adjust for dividends, cumulative returns could be closer to 50%.
