Investors who have a TFSA know that the account is one of the best wealth-building tools available to investors. Those investors also know that there’s ample TFSA room to utilize each year, and many still have contribution room from prior years.
This presents a unique opportunity for investors who still have TFSA room to contribute. There’s no shortage of great stocks on the market to add to your TFSA.
And for those investors who have $21,000 in TFSA room, there’s one Canadian dividend stock that stands out more than others. That stock is Bank of Nova Scotia (TSX:BNS).
Scotiabank is one of Canada’s big bank stocks. This means that the company offers a generous dividend and strong growth prospects, and operates within a highly defensive moat in Canada.
Scotiabank’s strategy is evolving
That defensive moat is a key aspect of Canada’s big banks. It also means that the banks have turned to international markets to pursue long-term growth.
That’s a differentiating factor for Scotiabank. Rather than focus solely on the U.S. market like most of its big-bank peers, Scotiabank expanded internationally, even earning the label “Canada’s most international bank”. That helped the bank generate a growing proportion of its revenue from its international segment.
In recent years, Scotiabank shifted that policy. More specifically, the bank shifted its growth expansion from more volatile markets in Latin America to more mature markets in North America.
By doing so, Scotiabank is creating a connected North American banking platform. The bank already has a large presence in Canada and Mexico. Exposure to the U.S. markets comes mainly from its investment in KeyCorp.
That more focused footprint helps Scotiabank reduce some of the volatility related to its prior international strategy.
That strategy shift is working. In the second fiscal quarter of 2026, Scotiabank reported net income of $2.6 billion, earning $2.02 per share on an adjusted basis. The Canadian banking segment generated $935 million of that, reflecting a 53% increase over the prior year.
That improvement suggests that Scotiabank’s core operations are gaining momentum at the same time its broader strategic shift continues to unfold.
For investors looking to allocate some of that TFSA room, that increase is an important point to note. It becomes especially interesting once Scotiabank’s dividend enters the picture.
Generate some income from Scotiabank
Like its big bank peers, Scotiabank offers investors a quarterly dividend. In fact, Scotiabank has paid that dividend to shareholders for nearly two centuries without fail. That level of consistency is rare and makes the bank an intriguing candidate for any unused TFSA room.
Scotiabank has also provided investors with regular dividend increases for well over a decade. That includes the most recent increase to $1.14 per share.
As of the time of writing, the yield on that dividend works out to 3.8%. For investors with $21,000 in contribution room to allocate to Scotiabank, that works out to an income of nearly $800.
You can’t retire on that income, but it will generate a half-dozen shares from reinvestments alone. And remember that within a TFSA, those new shares begin compounding tax-free.
Will you consider this dividend stock for your TFSA room?
No stock is without risk, and that includes an otherwise defensive pick like Scotiabank. Fortunately, Scotiabank combines an improving growth outlook with an attractive dividend and an established banking business.
That makes Scotiabank a viable core holding in any well-diversified portfolio.
