Canadian investors are wondering which stocks should be on their watch lists to add to self-directed Tax-Free Savings Account (TFSA) and Registered Retirement Savings Plan (RRSP) portfolios focused on dividend income and long-term total returns.
Source: Getty Images
Bank of Nova Scotia
Bank of Nova Scotia (TSX: BNS) trades near $122 per share at the time of writing compared to the 2026 high above $126. The stock is up 60% in the past 12 months and has doubled its price in the past two years.
The rally is a welcome relief for long-term holders of BNS stock who watched the share price underperform its large Canadian peers for several years.
All the big banks have enjoyed strong rallies over the past 24 months amid positive market conditions. Interest rate cuts in 2024 and 2025 helped ease pressure on provisions for credit losses as customers with too much debt found some breathing room. At the same time, rates remain elevated compared to pandemic and pre-pandemic levels, enabling the banks to generate better net-interest margins. Soaring stock markets have helped drive up profits for the wealth management divisions of the banks, as well.
The post-pandemic economy has remained resilient despite the tariff uncertainties. As such, the feared mortgage cliff has turned out to be a minor bump in the road. In fact, banks are actually faring well on this front as they extend amortizations for homeowners who are under some pressure on renewals, but not so much that they have to hand back the keys.
At the same time, Bank of Nova Scotia has made good progress over the past couple of years on its turnaround plan, in which the company reduced staff and streamlined operations to drive more efficiency across the business. The bank is also shifting its growth capital away from Latin America to focus more on the United States and Canada.
Improvements in Bank of Nova Scotia’s return on equity (ROE) have helped support the rally in the share price. More gains should be on the way as the benefits of the turnaround efforts work their way through the various business groups. Looking ahead, AI has the potential to automate significant workflows at all of the banks. Many are already seeing big benefits, but there is more to come as the processes are fine-tuned.
Investors who buy BNS stock at the current price can get a dividend yield of 3.7%.
Enbridge
Enbridge (TSX: ENB) is best known for its extensive oil pipeline network, but it diversified the asset base into other segments of the energy infrastructure and utilities industries in recent years.
The oil transport division remains important for the business given that the company moves about 30% of the oil produced in Canada and the United States, and it could once again become a growth engine with Canada’s new goal of becoming an energy superpower. Opposition to large new major pipelines previously forced Enbridge to shift its growth focus to the United States where it acquired an oil export terminal, a renewable energy developer, and three natural gas utilities.
The current $40 billion capital program is expected to generate 5% annual growth in distributable cash flow over the next few years. This should enable the board to maintain steady dividend hikes. Enbridge has increased the dividend annually for the past 31 years.
Investors who buy ENB stock at the current price can get a dividend yield of close to 5%.
The bottom line
Bank of Nova Scotia and Enbridge pay good dividends that should continue to grow. If you have some cash on the sidelines, these stocks deserve to be on your radar to take advantage of pullbacks.
