Canada’s banks rarely look exciting until investors need them. That could happen in 2026. The Canadian economy still looks resilient, but not bulletproof. Yet Canada’s biggest banks head into second-quarter earnings with expected profit growth of 10% to 25%, helped by trading and capital markets. The same setup comes with a warning. Consumer insolvencies climbed 26% from December to March, while housing remains soft. That mix makes dividend quality more important than a simple high yield.
Bank of Nova Scotia (TSX:BNS) and Canadian Imperial Bank of Commerce (TSX:CM) both offer long histories, strong brands, and quarterly income. But if I had to pick one dividend stock to hold through 2026, I’d lean toward CIBC.
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BNS
Scotiabank stock deserves respect. It remains one of Canada’s largest banks, with personal and commercial banking, wealth management, and international operations across key markets in the Americas. It also pays the richer yield. The stock recently offered a forward yield near 4%, with an annual dividend of $4.40 per share. For investors who want income today, that looks tempting.
The bank also started fiscal 2026 with better momentum. In the first quarter, Scotiabank stock reported adjusted net income of $2.7 billion and adjusted diluted earnings per share (EPS) of $2.05, up 16% from last year. Its common equity tier one ratio (CET1) stood at 13.3%, giving it a solid capital cushion. That’s a useful combination for a bank trying to prove its turnaround can work.
The case for Scotiabank stock comes down to income and recovery. Management continues to focus on its North American corridor strategy, including a stake in U.S.-based KeyCorp, while trimming weaker international exposure. If the shift lifts returns, Scotiabank stock could offer both a strong dividend and share-price catch-up.
But risks still exist. Scotiabank stock carries more moving parts than CIBC. Its international exposure can help growth, but it can also bring currency swings, political risk, and credit uncertainty. The bank also still needs to convince investors it can close the profitability gap with peers. A higher yield can signal opportunity, but it can also signal doubt.
CM
CIBC looks cleaner in 2026. The bank has a bigger domestic focus, with strong positions in Canadian personal banking, commercial banking, wealth management, and capital markets. That can create housing and consumer-credit risk, especially if unemployment rises. But CIBC has spent years improving its balance sheet and profitability, and the latest quarter showed real strength.
In the first quarter of fiscal 2026, CIBC reported adjusted net income of $2.7 billion, up 23% from last year. Adjusted diluted earnings per share (EPS) reached $2.76, up 25%. Adjusted return on equity hit 17.4%, and its CET1 ratio reached 13.4%. Those numbers show a bank earning more, covering its dividend well, and still maintaining a strong capital position.
The dividend looks safer, too. CIBC’s latest quarterly dividend came in at $1.07 per share, or $4.28 annually yielding about 2.7% at writing with an adjusted dividend payout ratio of 38.5% in the first quarter. That leaves more room if loan losses rise or revenue cools. Scotiabank stock’s higher payout profile gives investors more income now, but CIBC gives them more breathing room.
Bottom line
Valuation doesn’t settle the debate. Both banks recently traded around 16.5 times trailing earnings, so neither screams cheap. That’s why the dividend decision comes down to quality, coverage, and confidence. Investors should also remember that bank stocks can fall hard when credit fears rise, even when dividends remain intact. Especially for investors who rely on dividends for steady cash flow. And both offer up those dividends even with $7,000 invested.
| COMPANY | RECENT PRICE | NUMBER OF SHARES | ANNUAL DIVIDEND | ANNUAL TOTAL PAYOUT | FREQUENCY | TOTAL INVESTMENT |
|---|---|---|---|---|---|---|
| BNS | $110.43 | 63 | $4.40 | $277.20 | Quarterly | $6,956.99 |
| CM | $159.51 | 43 | $4.28 | $184.04 | Quarterly | $6,858.93 |
For investors who need the highest yield, Scotiabank stock may still win. The income looks attractive, and the turnaround could reward patient shareholders. But for 2026, I’d hold CIBC as the better dividend pick. It offers stronger earnings momentum, a lower payout ratio, better profitability, and enough capital strength to ride through a tougher economy. In a market where safety may matter more than yield, that’s the bank I’d trust first.
