Bank of Nova Scotia (TSX:BNS) continues to hit new record highs. Investors who missed the big rally this year are wondering if BNS stock is still good to buy for a self-directed Tax-Free Savings Account (TFSA) or Registered Retirement Savings Plan (RRSP) portfolio focused on dividends and long-term total returns.
Bank of Nova Scotia share price
BNS trades above $101 per share at the time of writing. The stock price rose more than 30% so far in 2025 and has been on a steady upward trend following the April tariff-rout that saw the stock dip below $64.
The broader banks sector has delivered strong returns over the past nine months as the economy in both Canada and the United States remained resilient despite the turbulence caused by American tariffs and uncertainty on trade negotiations. Falling interest rates have also helped ease pressure on households and businesses that were carrying too much debt. This should help the banks reduce provisions for credit losses. At the same time, rates still remain high enough for the banks to generate decent net interest margins.
Bank of Nova Scotia’s stock price actually started the year on a negative trend. The stock faced headwinds in the first few months of 2025 after the company announced it would take a large charge on its planned sale of assets in Colombia, Costa Rica, and Panama. The disposition of these businesses is part of Bank of Nova Scotia’s strategy pivot that will see the bank allocate growth capital to the United States and Canada, rather than to Latin America where Bank of Nova Scotia spent billions of dollars on acquisitions in the past three decades to build a large presence in the region. The bank still has significant operations in Mexico, Peru, and Chile.
Additional monetization could be on the way. Investors will want to see if the hit taken on the asset sales this year is a one-off issue or if it is the first phase of a painful trend as the bank progresses on its strategy transition.
Earnings
Solid operating results across the broader business have helped investors forget about the charges taken on the asset sales. Bank of Nova Scotia reported adjusted net income of $2.56 billion for fiscal Q4 2025 compared to $2.12 billion in the same period last year. Return on equity (ROE) rose to 12.5% compared to 10.6%. For the full fiscal year, Bank of Nova Scotia generated adjusted net income of $9.51 billion compared to $8.63 billion in 2024. ROE increased to 11.8% from 11.3%.
Outlook
Soaring copper and gold prices bode well for Mexico, Peru, and Chile. This should be positive for Bank of Nova Scotia’s remaining operations in Latin America. Chile’s new president is expected to put policies in place to boost the mining sector. Peru will hold a presidential election in 2026. Political volatility has been a problem in the region for some time. A period of stability would help attract investment.
In the United States, the Bank of Nova Scotia spent US$2.8 billion in 2024 to purchase a 14.9% stake in KeyCorp, an American regional bank. The deal gives Bank of Nova Scotia a platform to expand its presence in the U.S. market.
At home, Bank of Nova Scotia is streamlining operations to make the business more efficient.
Risks
Businesses could face increased headwinds if trade negotiations with the United States drag out or end in painful compromises for key sectors. A new surge in unemployment in Canada would put pressure on households that are still struggling with too much debt. Investors should also be prepared for a potential market correction.
Should you buy BNS stock now?
Near-term turbulence in the broader equity market should be expected. That being said, BNS still offers a 4.3% dividend yield at the current share price, despite the big rally, so you get paid well to ride out some volatility. Existing owners of the shares should probably continue to hold the stock. New buyers focused on dividends might consider taking a small position and look to add on pullbacks.
Over the long haul, BNS should drift higher if management continues to deliver ROE improvements.
