It's about time we started appreciating the Canadian bank stocks after navigating what has been another challenging year. Undoubtedly, there's no telling if more relief will be on the way come 2025. However, I do think that the swollen dividend yields to be had on some of the underperforming big banks represent a great long-term buying opportunity for contrarian investors who want a nice yield alongside steady and predictable dividend growth over time.

Indeed, it's becoming tougher to evaluate the banks in this environment. With some of the Big Six names taking off to new highs while others slog closer to their multi-year lows, picking and choosing one's bank stocks has never been trickier.

Does one go for the upside momentum and improving fundamentals? Or is it better to pick up the most battered ones that haven't budged in recent quarters?

Indeed, the tides in the banking scene have changed. But I think that it's a mistake to sleep on the underperforming dogs of the Canadian banking basket, especially while their yields are at or above the 5% mark as we close off 2024.

In this piece, we'll look at two relative laggards in the Canadian banking scene that I believe have what it takes to make up for lost time over the next two to three years. Indeed, the 5% yields have to be seen as a top reason to buy them right here. However, I think there are fundamental catalysts that can power a more robust comeback.

TD Bank

TD Bank (TSX:TD) is down more than 12% year to date (and off over 30% from all-time highs), as many of its Big Six banking peers gain ground on the back of decent quarterly results.

Indeed, the money-laundering overhang continues to hurt the stock and investor sentiment. With the suspension of financial targets and a new top boss to come aboard, it's a highly uncertain time for the bank as investors and analysts revisit the drawing board. Indeed, growth out of the U.S. has hit a roadblock, at least for the next few years or so.

While TD Bank stock may be far less "growthy," I still think it's one of the most undervalued banks right here. It's still worth picking up at $75 and change, even if we haven't seen the last of the money-laundering overhang. I have no idea when TD Bank will give investors something to be bullish about again.

Either way, the 5.12% dividend yield, I think, makes TD stock one of the best banks for your buck for 2025 and beyond.

Bank of Nova Scotia

Bank of Nova Scotia (TSX:BNS) shares have actually had a decent second half of the year, now up close to 24% in the past six months. Unlike TD, there's a sense of relief with the name as the technical picture continues to improve. That said, the stock remains dirt-cheap at 13.49 times trailing price to earnings (P/E). With a 5.31% dividend yield, the name is an even better passive-income option than those battered shares of TD.

Though Bank of Nova Scotia isn't out of the woods yet, I must say I'm a fan of the newfound momentum and the still-modest valuation. Though TD may be richer with value, I'd not be against picking up shares of BNS as well if you're looking for international banking exposure.