2 Standout Canadian Stocks That Could Take Off in 2026

Canadian investors are wondering which top TSX stocks might still be attractive to buy for a self-directed Tax-Free Savings Account (TFSA) or Registered Retirement Savings Plan (RRSP) portfolio focused on dividends and total returns.

Bank of Nova Scotia

Bank of Nova Scotia (TSX:BNS) is up 10% in the past month on a nice bounce after the March pullback. The stock is now close to where it started the year, and more upside could be on the way.

Bank of Nova Scotia is making good progress on a turnaround plan that the CEO put in place three years ago. The bank is shifting growth capital to the United States and Canada, while reducing its investments in Latin America, where Bank of Nova Scotia previously spent billions of dollars to acquire and expand operations in Central and South America as well as Mexico.

The bank sold its operations in Colombia, Costa Rica, and Panama in 2025. Mexico, Peru, and Chile remain major markets for Bank of Nova Scotia, although additional monetization could be on the way.

As part of the strategy transition, Bank of Nova Scotia purchased a 14.9% stake in KeyCorp, an American regional bank with operations in 15 states. The deal gives Bank of Nova Scotia a good starting point to expand its presence in the American market.

Bank of Nova Scotia delivered solid fiscal Q1 2026 results. Adjusted net income came in at $2.695 billion compared to $2.362 billion in the same quarter last year. Adjusted return on equity (ROE) rose to 13% from 11.8%. Ongoing ROE improvements in the coming quarters could drive the share price higher.

Investors who buy BNS stock at the current level can get a dividend yield of 4.25%.

Canadian National Railway

Canadian National Railway (TSX:CNR) is also up double digits in the past month, now trading near $157 per share. The stock has been on a choppy ride for the past two years as wildfires, labour disputes at ports, and tariffs disrupted operations. Bargain hunters started moving into the stock around $130 per share, but even with the bounce, CN still sits well below the 2024 high of around $180.

CN said U.S. tariffs cost it $350 million in lost revenue last year. Despite the challenging market conditions, the railway remains very profitable and continues to return excess cash to shareholders through buybacks and dividend increases.

Canada’s efforts to expand international trade should be positive for CN in the coming years. At the same time, trade with the United States will expand as the economy grows, even if some sectors see a decline due to tariffs.

The bottom line

Investors should prepare for some potential turbulence if the Canadian and U.S. economies go into a recession while interest rates remain elevated, but the downside would be an opportunity to add to an existing position in these stocks.

However, any news of a trade deal between Canada and the United States in the coming months could send the share prices meaningfully higher. If you have some cash to put to work, Bank of Nova Scotia and CN deserve to be on your radar.

The post 2 Standout Canadian Stocks That Could Take Off in 2026 appeared first on The Motley Fool Canada.

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More reading

• 4 Canadian Stocks Worth Holding When Market Anxiety Starts to Rise
• 4 Dividend Stocks That Look Worth Adding More of Right Now
• Canadian Stocks to Buy Today and Hold for the Next 7 Years
• 2 High-Yield Dividend Stocks That Could Be a Safer Pick for Canadian Retirees
• 4 Dividend Stocks I’d Happily Double My Position in Today

The Motley Fool recommends Bank Of Nova Scotia and Canadian National Railway. The Motley Fool has a disclosure policy. Fool contributor Andrew Walker has no position in any stock mentioned.