Canada’s bank stocks are some of the best long-term options for any investor. That view is grounded in the historical performance of the big banks during times of volatility.
With interest rates shifting, inflation cooling unevenly and global uncertainty lingering, bank stocks are proving why they’re the reliable shock absorbers for the market.
Two solid options for investors looking to counter volatility are Toronto-Dominion Bank (TSX:TD) and Bank of Nova Scotia (TSX:BNS).
Here’s a recap on both and why they belong in your portfolio right now.
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Scotiabank: Diversified and growing
Scotiabank is the first of the bank stocks for investors to consider right now. The bank isn’t the largest of the big banks, but it does offer investors significant long-term appeal through its diversified international segment.
That international segment generates the bulk of Scotiabank’s growth. And more importantly, unlike its big bank peers, that growth stems from a variety of international markets, and not just the U.S.
That’s part of the reason why Scotiabank earned the name “Canada’s most international bank.” Scotiabank is a truly global operation. The bank boasts operations across Canada, the U.S., Mexico, Latin America, Europe, and the Asia-Pacific region.
This not only provides a diversified appeal to offset volatility, but also makes the bank very in touch with global market shifts. During fiscal 2025, the bank’s international segment earned $2,809 million, reflecting a 2% year-over-year improvement.
In recent years, Scotiabank has refocused its international growth away from less developed (and more volatile) markets in Latin America to more mature markets in the U.S. and Mexico.
The solid growth from those international markets helps fuel another advantage for investors looking at bank stocks: Scotiabank’s dividend.
As of the time of writing, Scotiabank offers a quarterly dividend that pays an appetizing 4.39% yield. The bank has also amassed a tradition of providing annual upticks to that dividend going back well over a decade.
TD Bank: Income and growth first
It would be hard to compile a list of bank stocks to consider investing in and not consider TD Bank. As the second-largest lender in Canada, TD has no shortage of branches or earnings. In the most recent quarter, the bank earned an impressive $3.9 billion on an adjusted basis, reflecting an impressive 22% gain.
While the bulk of TD’s income stems from its domestic arm ($1,865 million in the most recent quarter), the bank’s growing focus on the U.S. market deserves attention.
TD’s U.S. presence is larger than its Canadian network by branch count. Today, that network stretches from Maine to Florida on the East Coast. That network was integrated following a series of well-executed acquisitions following the Great Recession. In the most recent quarter, the bank earned $719 million, reflecting an impressive 31% gain over the prior year.
TD’s growing U.S. presence not only feeds further growth but also helps it pay out a quarterly dividend. As of the time of writing, the bank offers a 3.38% yield. Like Scotiabank, that dividend comes with over a decade of annual increases.
In terms of history, TD has been paying out that dividend without fail for well over 160 years. This fact alone makes this a bank stock that every investor should consider for any long-term portfolio.
Bank stocks can counter volatility
Bank stocks like TD Bank and Scotiabank can provide investors with ample growth and income-earning opportunities. That’s in addition to being some of the most defensive picks on the market.
In my opinion, one or both should be core holdings in any well-diversified portfolio.
