Canada’s Big Six banks, and the country’s banking sector in general, are known globally as a bedrock of stability. Beyond strict regulatory oversight, these giant lenders boast lengthy, uninterrupted dividend payment records of more than a century. However, from an investment perspective, they are not created equal.
National Bank of Canada (TSX: NA) is a strong buy if you’re investing in late 2026 and want both downside protection and income generation. While Bank of Nova Scotia (TSX: BNS) offers a more attractive yield, I’d wait and see until the ongoing strategic restructuring to drive growth is complete.
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The buy
National Bank maintains a positive, long-term market outlook, notwithstanding inevitable short-term fluctuations. The $83.3 billion bank also sees a favourable outlook for major asset classes over a 10-year and 30-year investment horizon. This is good for investors, though returns are expected to be more modest than in recent years.
Meanwhile, NA has delivered a total return of plus-168.6% over three years, representing a 39% compound annual growth rate (CAGR). The current share price is $215.48 (+27.3% year-to-date), while the dividend offer is a decent but super-safe 2.4%. This Big Bank stock also has the lowest average dividend payout ratio, indicating it retains more capital than larger peers.
According to a Desjardins Capital Markets report, NA recorded the strongest average return on equity (ROE) over the past decade as well as the largest cumulative ROE improvement among all Big Six banks. The reported ROE in Q3 fiscal 2026 is 16.1%. It doesn’t include the integration and acquisition costs for Canadian Western Bank, a temporary headwind.
In the first three quarters of fiscal year 2026 (nine months ended July 31, 2026), net income rose 28% year-over-year to $3.8 billion. According to Laurent Ferreira, NA’s President and CEO, the bank has been riding strong momentum since the beginning of the year. He said the strong Q3 financial results reflected positive operating leverage and resilient credit performance.
Ferreira added that National Bank is committed to working with governments and businesses to deploy capital towards reindustrialization, infrastructure, defence, and energy. Investments in these sectors will strengthen Canada’s productive capacity and support durable economic growth. NA investors can also expect durable and healthy long-term returns.
The skip
Bank of Nova Scotia is in turnaround mode after exiting the Latin American markets. The $160.3 billion bank, Canada’s fourth-largest lender, said operations in the region generated low returns on capital. BNS also believes that focusing on North America offers better cross-border cooperation. It retained Mexico because it is inside the region’s trade corridor.
Performance-wise, BNS has rewarded investors with ample returns. At $131.36 per share, the trailing one-year return is plus-45.2%. If you invest today, the dividend yield is 3.5%. In Q3 fiscal 2026, net income increased 16.9% year-over-year to $2.9 billion, a new third-quarter record. Its Canadian Banking earnings grew 12% to $1 billion on record revenue of $10.5 billion.
Head start and faster growth
National Bank of Canada can capture near-term domestic earnings faster after the successful CWB integration. Scotiabank will take time to execute a structural overhaul and focus on North America. NA has a head start, while BNS is at a disadvantage because its turnaround timeline is longer.
