Cash in Big Wins with These 2 Best TSX Bank Stocks
As part of diversification, investors should consider all sectors. Indeed, the banking sector and banking stocks offer excellent long-term total return potential for investors. And in this era of economic reopening, these banking stocks offer excellent leverage to this catalyst compared to other sectors.
In Canada, the banking sector is dominated by a few key players. Having said that, I think some bank stocks are better than others.
Let’s dive into two of the top Canadian banks that any investor should consider right now.
Major Bank Stocks: TD Bank
Regarding the growth of the banking sector, Toronto-Dominion Bank (TSX: TD) (NYSE: TD) gets nodded as first choice. Indeed, many analysts remain optimistic about TD’s growth potential in the current environment.
Well, TD’s growth history is impressive. Recent results released by the big Canadian bank show that the recovery is in full swing. This reversal is partly explained by lower provisions for loan losses and credit default rates. However, the factor that receives less attention is the means by which TD has actually grown its revenue organically in recent times.
In the last quarter, TD posted quarterly profit of $ 3.4 billion. These profits increased significantly from the same quarter last year for obvious reasons. Indeed, it is difficult to compare the numbers from year to year when last year was so bad. That said, it was the speed of the recovery that once again got many investors excited about the banks.
TD’s current yield of 3.6% is extremely attractive considering where bond yields stand today. Indeed, as investors increase their demand to purchase bond-type proxies, banks may continue to see capital inflows for some time. In this era of low interest rates, paradoxically, banks could outperform.
However, if rates were to rise, lenders like TD could also benefit. A steepening of the yield curve would be bullish for net interest margins, which remain low. As a result, TD is a great choice for bulls in the economic trajectory as well as bears. It’s a relatively safe choice in a market filled with overvalued stocks today.
Another great Canadian bank worth checking out is Bank of Nova Scotia (TSX: BNS) (NYSE: BNS).
Indeed, the attraction of Scotiabank lies in the diversification provided by this action. The company derives a substantial portion of its sales and net income from its international operations. Indeed, the company’s focus on high-growth markets globally positions this stock well for growth-seeking investors.
Like TD, Scotiabank has many of the same fundamental drivers that underpin its business. As a result, investors optimistic about the economic recovery will want to consider this banking giant now.
However, I think Scotiabank’s diverse approach to generating growth is worth highlighting. In addition, the bank’s 4.5% return is among the best of its peers. For investors looking for higher yielding bank stocks, Scotiabank might be the perfect fit.
Do you like these top banking choices? Here are some other key actions to take into account now:
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This article represents the opinion of the author, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We are straight! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer, so we post sometimes articles that may not conform to recommendations, rankings or other content. .
Foolish contributor Chris MacDonald has no position in the stocks mentioned in this article. The Motley Fool recommends the BANK OF NOVA SCOTIA.