TORONTO — The Bank of Nova Scotia (TSE:BNS) saw its shares edge higher on Friday, closing at C$122.39, a gain of 1.04% or C$1.26. The stock now sits just 1.9% below its 52-week high of C$124.79, reached earlier in June. Trading volume was notably light at 1.60 million shares, less than half the average daily volume of 4.16 million.
The Toronto Stock Exchange's S&P/TSX Composite Index rose 0.9%, or 308.17 points, to close at 35,274.84. U.S. markets were closed in observance of Independence Day, limiting cross-border trading activity.
Scotiabank's dividend yield of 3.73% remains the highest among Canada's six major banks, a full 109 basis points above the peer median of 2.64%. This yield gap persists even as the stock trades near its one-year peak. At a price-to-earnings ratio of 16.92, Scotiabank is valued below the peer median of 18.96, offering a relatively cheaper entry point for income-focused investors.
The bank is set to go ex-dividend on July 7, with a quarterly common dividend of C$1.14 per share declared. Shareholders on record as of the close of business on July 7 will receive the payout on July 29. Annualized, this amounts to C$4.56 per share, reinforcing Scotiabank's reputation as a high-yield dividend stock.
Despite the attractive yield, Scotiabank's market capitalization of C$150.72 billion is only marginally above Canadian Imperial Bank of Commerce's (TSE:CM) C$147.97 billion, and its P/E ratio is less than one turn above CIBC's 16.03. This suggests the market is not pricing in a distressed yield scenario, but rather a measured premium for the bank's dividend policy.
The broader TSX rally was driven by resource stocks, with the materials sector climbing 2.4% amid rising gold and copper prices. "Lower rate expectations weaken the U.S. dollar, boost gold and benefit Canadian resource stocks," noted Matt Manara, executive vice president and portfolio manager at Avenue Investment Management, in a Reuters report.
Scotiabank's fiscal second-quarter results, reported in May, underpin the current yield. Net income reached C$2.63 billion, up from C$2.03 billion a year earlier, with adjusted diluted earnings per share of C$2.02. Canadian Banking earnings surged 53% to C$935 million. Chief Executive Scott Thomson affirmed the bank "remains on track to achieve its financial objectives for fiscal 2026."
Credit quality remains a watchpoint for investors. The provision for credit losses totaled C$1.22 billion in the quarter, down from C$1.40 billion a year ago. However, gross impaired loans rose to C$7.61 billion from C$7.25 billion in the prior quarter, signaling some deterioration in loan performance.
Scotiabank is scheduled to report its fiscal third-quarter results on August 25. Until then, the yield gap and upcoming ex-dividend date will keep the stock in focus for income-oriented investors.
