1 MULTIBAGGER FINANCIAL STOCK DOWN 6% PAYING AN IRON-CLAD DIVIDEND

When markets get rocky, and headlines scream recession, many Canadians start thinking about where to park their cash. And with good reason. According to a June 2025 report from BMO, concerns about inflation, recession, and job security jumped sharply from March to April. In fact, 76% of Canadians now say they’re more concerned about inflation, and 58% are more worried about their personal finances. In times like these, investors often turn to dependable dividend stocks to provide stability and income. One of the best examples on the TSX right now might be Bank of Nova Scotia (TSX:BNS).

Why Scotiabank?

Scotiabank, one of Canada’s Big Five banks, has been a pillar of financial strength for nearly two centuries. It’s known for paying dividends every year since 1833. Right now, the dividend stock is down about 6% year to date. But while the share price slipped, the dividend hasn’t. In fact, it’s holding steady with a very attractive yield of 5.8% as of writing. That’s well above the TSX average and higher than most savings accounts or Guaranteed Investment Certificates (GICs). And best of all, that dividend is backed by solid fundamentals. A $7,000 investment could bring in $402.80 in annual income at writing through dividends alone!

In its second quarter 2025 earnings report, Scotiabank posted net income of $2.03 billion, or $1.52 per share. While that came in a bit below the $1.56 expected, it still represents a strong showing in a turbulent economy. Revenues hit $8.35 billion, supported by gains in Global Wealth Management and International Banking. Wealth income was up 17% from a year ago, while international earnings climbed 7%. These segments are helping to balance out weaker results from Canadian Banking, where net income fell 31%, largely due to rising provisions for credit losses.

Staying strong

These provisions are part of the bank’s cautious stance amid economic uncertainty. The common equity tier-one ratio, which measures financial strength, remains solid at 13.2%. That gives Scotiabank a strong buffer in case the economy gets worse. Management also announced a buyback program for up to 20 million shares, signalling confidence in the dividend stock’s long-term outlook.

Despite short-term challenges, this is a bank that knows how to play the long game. It has a diverse revenue stream, with operations in Latin America and the Caribbean, giving it exposure to faster-growing markets. While that adds some risk, it also provides more ways to grow earnings over time. Its focus on digital banking and cost control should also help it stay competitive.

Going for growth

For income-focused investors, the dividend is really the highlight here. At 5.8%, it provides steady income even if the stock stays flat. And with a payout ratio of around 50%, it looks sustainable. The bank has a history of increasing its dividend when profits grow, and while hikes may be paused for now, the long-term trend is clearly upward. Holding a stock like this can offer powerful compounding benefits, especially if you reinvest the dividends.

Furthermore, this has been a multi-bagger stock for years. Shares of Scotiabank are up 14% in the last year, 48% in the last five years, and a whopping 316% in the last 20. Yet it’s true that Scotiabank isn’t a flashy growth stock. It’s a steady, reliable financial institution with a long history and strong foundations. It might take time for the share price to recover, but while you wait, you’re collecting cash every quarter. In today’s environment of higher inflation and economic jitters, that’s not a bad place to be.

Bottom line

The BMO survey shows that Canadians are paying closer attention to their financial future. Many are worried, but they’re also making smarter choices. And for those looking to ride out the storm, Scotiabank offers a classic combination of income, value, and resilience. It’s not immune to market noise, but its dividend is about as iron-clad as it gets on the TSX. That kind of dependability is rare and, in times like these, worth holding on to.

The post 1 Multibagger Financial Stock Down 6% Paying an Iron-Clad Dividend appeared first on The Motley Fool Canada.

More reading

• Want Decades of Passive Income? 3 Stocks to Buy Now and Hold Forever
• Here’s How Many Shares of Scotiabank Stock You Need for $5,000 in Annual Dividends
• A $7,000 TFSA Approach That Focuses on Quality and Value
• How I’d Use $7,000 to Create an Income Machine of Tax-Free Cash
• Why a $30,000 Investment in These Sectors Could Pay Off

Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool recommends Bank Of Nova Scotia. The Motley Fool has a disclosure policy.

2025-06-15T13:20:36Z