Income investors looking to diversify their dividend stock investments, should consider Canadian stocks. In particular, we like the Canadian bank stocks, as they tend to have lower valuations, and higher dividend yields than their U.S. banking peers.
As a result, income investors should not ignore Canadian bank stocks. The following 3 Canadian banks are attractive for income investors.
Royal Bank of Canada (RY)
The Royal Bank of Canada is the largest bank in Canada by market capitalization, and the country’s largest bank by total assets. RBC offers banking and financial services to customers primarily in Canada and the U.S. and is a member of the Big 5 Canadian banks.
The financial institution operates in these core business units: Wealth Management (34% of FY 2025 revenue), Personal Banking (30%), Capital Markets (22%), and Commercial Banking (13%). RBC is cross-listed on the Toronto Stock Exchange and the New York Stock Exchange, trading under the ticker RY on both exchanges.
On 02/26/26, RBC reported fiscal Q1 2026 results. The bank reported year-over-year revenue growth of 7.3%. Management put aside a reserve of C$1.1 billion in the form of provision for credit losses (“PCL”), up 3.8% year over year (“YOY”). Additionally, non-interest expense rose 2.2%.
Net income climbed 13% YOY with diluted earnings-per-share (“EPS”) climbing 14% to C$4.03. Adjusted net income came in 12% higher at C$5.9 billion, and its adjusted diluted EPS was C$4.08 (up 13%). The bank’s capital position remained solid with a Common Equity Tier 1 ratio at 13.7%, up from 13.2% a year ago. The PCL on impaired loans rose to 0.40% (versus 0.39% a year ago). Its return on equity remained solid at 17.6% (versus 16.8% a year ago).
RBC makes strategic acquisitions to grow its business for the long haul. For example, in September 2022, it announced the completion of its acquisition of Brewin Dolphin, an award-winning wealth-management firm in the U.K., for £1.6 billion. Subsequently, it acquired HSBC Canada for C$13.5 billion in March 2024. From FY2016-2025, RBC increased its adjusted EPS by 8.7% per year.
RY has increased its dividend for 15 consecutive years and currently yields 3.0%.
Toronto-Dominion Bank (TD)
Toronto-Dominion Bank traces its lineage back to 1855 when the Bank of Toronto was founded. It is now a major bank with C$1.9 trillion in assets. The bank produces about C$14 billion in annual net income each year.
TD reported fiscal Q4 2025 earnings results on December 4th, 2025. For the quarter, TD generated adjusted revenue growth of 7.6% to C$16.0 billion. Provision for credit losses fell 11% to C$982 million.
Adjusted net income came in 22% higher to C$3.9 billion with the adjusted earnings per share rising 27% to C$2.18. The adjusted return on equity was 12.8%, up from 11.7% a year ago.
The bank raised its quarterly dividend by 2.9% to C$1.08 per share. This extends its dividend growth streak, as measured in CAD, to 15 years.
The full fiscal year results provide a bigger picture with adjusted revenues rising 8.8% to C$61.8 billion and PCL rising 5.9% to C$4.5 billion. Ultimately, adjusted net income rose 5.2% to C$15.0 billion and the adjusted EPS rose 7.2% to C$8.37.
Its PCL ratio as a percentage of average net loans and acceptances was 0.47%, up from 0.46% from a year ago. Net impaired loans as a percentage of net loans and acceptances was 0.40%, up from 0.36% a year ago. The bank’s adjusted ROE was 12.9%, down from 13.6% a year ago.
TD has increased its dividend for 15 consecutive years and currently yields 3.4%.
Bank of Nova Scotia (BNS)
Bank of Nova Scotia (often called Scotiabank) is the fourth-largest financial institution in Canada behind the Royal Bank of Canada, the Toronto-Dominion Bank and Bank of Montreal (BMO).
Scotiabank reported a strong fiscal Q4 2025 results on 12/02/25. Overall, revenue rose 15% year over year to C$9.8 billion, while non-interest expenses rose 10% to C$5.8 billion.
Provision for credit losses (“PCL”) rose 8.1% to C$1.1 billion. Net income came in C$2.2 billion, up 31% from a year ago. Ultimately, the diluted earnings per share (“EPS”) jumped 35% to C$1.65. Return on equity (ROE) was 11.0% compared to 8.3% a year ago.
The bank’s PCL as a percentage of average net loans & acceptances was 0.58% and the PCL on impaired loans as a percentage of average net loans & acceptances was 0.54%; these figures were similar compared to last year. Adjusted net income came in at C$2.6 billion, up 21% from a year ago. And adjusted EPS rose 23% year over year to C$1.93.
The bank’s competitive advantage is in its international growth strategy, as it is willing to acquire growth outside of its primary markets. When the global economic environment improves, its international strategy should be an advantage for growth. Scotiabank’s international focus is on Latin American geographies like Mexico, Peru, and Chile.
During the Great Recession, Bank of Nova Scotia increased its dividend and only froze its dividend in fiscal year 2010 before resuming dividend growth afterwards. Similarly, the OSFI regulatory restriction led to a dividend freeze because of the pandemic (and potential impacts to the economy). The bank came out with a dividend increase as soon as the ban was lifted.
BNS normally has a payout ratio of around 50% that aligns with other big Canadian banks. BNS stock currently yields 4.7%.
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