Scotiabank Shares Rise 0.85% on Dividend Hike, Buyback Plan

The Bank of Nova Scotia (BNS) shares surged to their highest level since December 2024 today, with an intraday gain of 0.85%.

The strategy of buying BNS shares after they reach a recent high and holding for one week yielded a 14.40% return, underperforming the benchmark by 41.88%. With a maximum drawdown of -21.07% and a Sharpe ratio of 0.32, the strategy faced significant volatility and risk, highlighting the challenges of such a short-term, high-risk approach.

Scotiabank's decision to increase its quarterly dividend from $1.06 to $1.10 per share in Q2 2025 signals a strong financial position and confidence in its ability to return value to shareholders, even amidst economic uncertainty. This move is likely to bolster investor trust and potentially drive up the stock price.

The bank's strategic shift in its international presence, including the exit from the Latin American credit card business and increased investment in North America, is a significant development. The acquisition of KeyCorp in the U.S. contributed approximately $62 million in net income in Q2 2025, highlighting the potential benefits of this strategic realignment.

Scotiabank's announcement of a share buyback program, which includes the repurchase of up to 20 million shares, is another positive development. This initiative can help offset dilution and potentially lift earnings per share, making the stock more attractive to investors.

The bank's robust financial health is further evidenced by its common equity tier-one (CET1) ratio, which stood at 13.2% in Q2 2025. This strong capital buffer, which exceeds regulatory requirements, supports the bank's ability to maintain dividends even in tougher economic conditions, providing a sense of security to investors.

Barclays' decision to lower their target price on Bank of Nova Scotia from C$81.00 to C$78.00 and set an "equal weight" rating might influence investor sentiment. However, the overall strategic actions and financial health of the bank suggest a positive outlook for its stock price.