While it’s nearly impossible for anyone to precisely predict where the markets are headed next, smart Foolish investors know the value of holding steady income-generating stocks for the long term. And when those stocks also manage to grow over time, they become even better for your Tax-Free Savings Account (TFSA). In uncertain times or even in strong bull runs, quality Canadian dividend stocks can quietly work in the background, adding to your income, quarter after quarter, without requiring daily monitoring.
One such top TFSA pick is Canada’s Bank of Nova Scotia (TSX:BNS), or Scotiabank. It’s not only delivering stable dividends; it has also seen strong appreciation in its share price in recent months. In this article, I’ll spotlight why Scotiabank is one market-proof dividend stock that TFSA investors may want to consider buying right now.
A top TFSA stock to buy with a great mix of income and momentum
Founded in Toronto, Scotiabank is one of Canada’s big five banks, with operations across Canada and more than 15 countries internationally. It offers services in personal and commercial banking, global wealth management, and investment banking.
At the time of writing, BNS shares are trading at $99.39 each, with a market cap of $122.9 billion. The stock offers a quarterly dividend, and its current annualized dividend yield sits at 4.4%.
Interestingly, its shares have gained over 34% in the past six months. As a result, this TFSA-friendly stock is now up nearly 59% from its 52-week low, showing strong investor interest and confidence.
Earnings continue to strengthen
After witnessing a slower phase in recent years due mainly to macroeconomic uncertainties, Scotiabank’s financials are regaining momentum. In the fourth quarter of its fiscal year 2025 (ended in October), the bank’s adjusted net income rose 21% YoY (year-over-year) to $2.6 billion, and adjusted earnings rose to $1.93 from $1.57 per share.
That strong earnings momentum was not limited to one quarter. For the full fiscal year 2025, its adjusted net income also grew by 10% YoY to $9.51 billion.
Much of this growth came from better margins in Scotiabank’s lending business, a rebound in its capital markets segment, and strong fee income from its wealth management. Meanwhile, its international banking segment saw solid growth with a return on equity of 14.7%.
What’s working behind the scenes
Over the last year, BNS has been reshaping its structure by simplifying operations in Canadian banking, restructuring its Asia operations, and focusing on key international markets. These moves, while coming with some short-term costs, are already starting to reflect in its earnings growth.
Its global wealth management division saw adjusted earnings rise 17% YoY in fiscal 2025, helped by strong mutual fund and brokerage revenues. Similarly, its assets under management grew 16% YoY to $432 billion, and deposits jumped 32%.
Scotiabank’s focus now is on primary client relationships, better capital allocation, and cost efficiency. This approach appears to be helping it build momentum even in an uncertain macro environment.
Why TFSA investors may want to consider this
Scotiabank’s strong earnings and dependable income give it exactly the kind of mix that works for a long-term TFSA strategy. The quarterly dividend provides regular income, while the improving fundamentals and upward stock trend mean there’s also a real chance for capital gains.
Add to that the benefits of tax-free growth inside a TFSA, and BNS stock becomes an attractive pick for investors who don’t want to worry about market timing.
