It is no surprise that COVID-19 damaged global economies in an unprecedented way. Recovering from the financial losses due to the pandemic will likely take longer than initially anticipated. However, there are chances that one province in Canada might fare better in seeing a rapid recovery compared to most other parts of the country.
I will discuss British Columbia’s chances of quick recovery from COVID-19’s economic losses and why you might want to consider investing in Canadian Western Bank (TSX:CWB) to leverage the recovery to benefit your portfolio.
British Columbia poised to see lower losses and faster recovery
The Conference Board of Canada (CBC) is an Ottawa-based think tank that is predicting Canada’s gross domestic product (GDP) to decline by 8.2% by the end of this year. It suggests that it might take till the end of 2021 to see the GDP return to pre-pandemic output.
However, the CBC believes that BC will see only a 5.5% fall in its GDP. It also predicts that BC’s GDP will increase by 6.7% as 2021 comes to an end. The board’s chief economist, Pedro Antunes, believes that BC has a better chance of a rapid recovery, because it managed to contain the virus early on.
The province managed to mitigate the impact of closures and the effects on the labour market, and is already seeing a better situation compared to other provinces as a result. BC is undoubtedly in a deep recession right now, but it is relatively better than other provinces in the same period.
People are already being rehired in several industries operating in BC, while businesses in other provinces are still experiencing losses. I think that the Canadian Western Bank could be an excellent investment in light of BC’s rapid recovery.
Banking on BC’s recovery
With the region’s recovery slated to take place faster than the rest of the country, it would be wise to look at a BC bank. Canadian Western Bank isn’t the most significant Canadian banking stock in the country, but it has proven to be a reliable financial institution for almost the last three decades.
Canadian Western Bank is a Canadian Dividend Aristocrat. At writing, it has the fourth-longest dividend-growth streak of 28 consecutive years. It is also the longest streak among its peers in the financial sector. Its shares are trading for $24.92, and the bank is offering its shareholders a juicy 4.65% dividend yield.
The initial sell-off frenzy affected the entire financial sector, and CWB’s value fell by almost 35% peak to trough in 2020. Since its March bottom, its value has increased by 44.46%. It looks poised to continue growing its dividends. Beyond its dividends, the name of the bank suggests its prominence in the western provinces.
As of its latest earnings report, more than 70% of its clients reside in BC, Alberta, or Saskatchewan. A boost in recovery for BC could also have a positive impact on the bank.
Foolish takeaway
CBC’s predictions on British Columbia’s more rapid recovery still needs time to come true. However, you can still leverage any positive news from the region by investing in a stock that is already performing well amid the current volatility. At writing, CWB is down 4.41% year to date. It is still trading for a discount from its pre-pandemic prices. Investing in the stock could help you leverage its capital gains and increasing dividends to grow your wealth.
