Canada’s banking sector has long been recognized as one of the most stable and reliable in the world. When paired with the tax-free compounding power of a TFSA (Tax-Free Savings Account), investing in top-quality Canadian banks can be a powerful long-term wealth-building strategy. The right bank stocks can offer not just dependable dividends but also steady capital appreciation over time.
While many investors gravitate toward high-growth tech names, Canada’s big banks continue to deliver consistent performance, attractive yields, and solid upside potential. Some have already posted double-digit gains in 2025, reflecting improving profitability and renewed investor optimism.
Here are two Canadian bank stocks that stand out as strong candidates for TFSA investors looking for both growth and income.
Also Read: Best long term Canadian stocks
Scotiabank: International Exposure Driving Renewed Strength
Bank of Nova Scotia (TSX:BNS), better known as Scotiabank, is one of Canada’s most globally diversified banks. With significant operations across Latin America, particularly in Mexico and Chile, the bank benefits from exposure to faster-growing economies outside Canada.
After a prolonged period of restructuring and strategic refocus, Scotiabank stock has made a strong comeback—rising 35% in the past six months. The shares currently trade around $91.86, giving the bank a market capitalization of roughly $113.6 billion, and offering investors a 4.8% dividend yield.
In its fiscal Q3 2025, Scotiabank reported a 13.4% year-over-year increase in revenue to $9.49 billion, while net profit climbed 15.5% to $2.35 billion. Both its Canadian banking and international divisions contributed meaningfully to this performance, showcasing broad-based strength.
The bank is also investing heavily in digital transformation and efficiency initiatives, positioning itself for sustainable growth. With a focus on cost management and expanding its presence in high-growth markets, Scotiabank looks well-placed to extend its current momentum—making it a compelling TFSA holding for investors seeking both income and capital appreciation.
Also Read: Canadian stocks to buy 2025
CIBC: Combining Solid Earnings With Innovation
Another attractive choice for TFSA investors is the Canadian Imperial Bank of Commerce (TSX:CM), or CIBC. The stock has climbed 27% so far in 2025, reflecting stronger earnings and renewed investor confidence. Currently priced near $116.82 per share with a $108.2 billion market cap, CIBC offers a respectable 3.3% dividend yield.
In the third quarter of fiscal 2025, CIBC reported 10% year-over-year revenue growth to $7.25 billion, and adjusted net income up 11% to $2.1 billion. Its Canadian personal and business banking division was a standout, posting 17% profit growth, thanks to rising lending volumes and improved margins.
Beyond its financial results, CIBC is embracing innovation through its new enterprise-wide artificial intelligence (AI) platform, dubbed CIBC AI. The initiative aims to enhance productivity and deliver more personalized client experiences. The bank has also introduced a no-fee, adaptive credit card designed to align with customer spending habits—further evidence of its forward-looking approach.
Conclusion
For TFSA investors, both Scotiabank and CIBC offer a compelling combination of income stability, growth potential, and technological progress. Scotiabank’s international exposure provides diversification and upside from emerging markets, while CIBC’s innovation-focused strategy strengthens its long-term competitive position.
Together, these two financial powerhouses can form the foundation of a tax-free portfolio built for steady returns and sustainable growth—a smart choice for any Canadian investor planning for the future.
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