After a rocky start to 2026, Canadian investors who haven’t yet bought shares on the way down might want to start putting together a shopping list, just in case the TSX Index and S&P 500 aren’t out of the woods quite yet. Undoubtedly, it’s impossible to know when and how the Iran war will end. And, with that, investors should be ready for any kind of market reaction, whether that’s calm or another scare, as the Federal Reserve in the U.S. (or Bank of Canada on this side of the border) looks to make a big pivot on its interest rate policy.
Indeed, it felt like rate cuts were completely off the table at the end of last year. Now, it’s rate cuts that might be shelved as more things add to the inflationary pressures that could propel the price of food, fuel, electronics (thanks to AI-driven price increases on dynamic random access memory and solid state drives), flight tickets, and many other goods markedly higher from current levels. We really do need a break from inflation, but with oil prices rocketing higher and AI continuing to impact everything from gaming consoles to laptop parts, it feels like more pain for our wallets is in the cards.
In any case, investors should consider what long-lasting inflation on a broader basket of goods could mean for one’s nest egg. If you’re a cautious investor who’s too heavy on cash, the opportunity cost of holding that cash could grow higher again.
And, with that, the case for investing in dividend payers, I believe, increases. In this piece, we’ll concentrate on the kinds of dividend stocks that, in my opinion, are still worth your time and investment dollars. They’ll pay you to wait, and hopefully, they’ll help you offset some of the blow of the inflation that exists today and the potentially worse inflation to come tomorrow.
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Bank of Nova Scotia
Bank of Nova Scotia (TSX: BNS) stock has been on quite a run, now up more than 42% in two years. And while the dividend is smaller, the price-to-earnings (P/E) is on the larger end of the past-decade-long historical range, I still think it’s a good time to be a buyer.
The 4.5% yield, while not towering, is still solid and enough to help any investor through another inflation hailstorm, the likes of which we may not have encountered since the months and quarters that followed the reopening from COVID-era lockdowns. What’s more, though, is that Bank of Nova Scotia’s dividend is on the high-growth track. With the bank getting the green light to repurchase up to 15 million shares, I think it’s time to get serious about what could be one of the last bountiful bargains in this market.
The shares go for 14.5 times trailing price-to-earnings (P/E), which isn’t all too bad considering the price that 4–5% yielders go for nowadays. Add the strategic acceleration into the equation, as well as the venture south of the border, and BNS stock stands out. And, as a Canadian bank with a considerable amount of energy banking business, Bank of Nova Scotia is well-equipped to navigate an energy shock.
With shares coming in more than 7%, I’d look to buy on a further pullback, especially considering BNS may very well be the dividend growth name to help batten down the hatches amid what could evolve to become an oil crisis, or even a mild stagflationary environment.
