This Province’s Economy Is Most Likely to Quickly Recover From COVID-19

Buy the Canadian Western Bank stock, as it operates in a region most likely to see rapid recovery from COVID-19.

| More on:
Coronavirus written newspaper close up shot to the text.

Image source: Getty Images

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.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Adam Othman has no position in any of the stocks mentioned.

More on Dividend Stocks

Two seniors float in a pool.
Dividend Stocks

TFSA: How to Earn $1,890 in Annual Tax-Free Income

Plunk these investments into your TFSA to earn passive income and avoid the taxman.

Read more »

Engineers walk through a facility.
Dividend Stocks

1 TSX Stock I Wouldn’t Touch With a 10-Foot Pole

AtkinsRéalis (TSX:ATRL) is one TSX stock I'd never invest in.

Read more »

edit Woman in skates works on laptop
Dividend Stocks

3 No-Brainer Stocks to Buy Under $30

These three stocks all offer a huge deal for investors looking for dividends, as well as growth that will last.

Read more »

You Should Know This
Dividend Stocks

How to Convert a $300 Monthly Investment Into $338 in Monthly Income

If you want a certain amount in monthly passive income, invest a similar amount today and leave the rest to…

Read more »

Increasing yield
Dividend Stocks

3 Income Stocks With Big Yields to Consider in April 2024

If you haven’t yet made your March investments, here are three income stocks to buy the dip and lock in…

Read more »

Senior Man Sitting On Sofa At Home With Pet Labrador Dog
Dividend Stocks

RRSP Investors: Don’t Miss Out on This Contribution Hack!

This hack has so many benefits for you -- not just when you put it in your RRSP but for…

Read more »

A red umbrella stands higher than a crowd of black umbrellas.
Dividend Stocks

Passive Income: 2 Safe Dividend Stocks to Own for the Next 10 Years

Dividend stocks such as Manulife and Fortis can help you generate a stable and recurring passive-income stream.

Read more »

Young woman sat at laptop by a window
Dividend Stocks

3 Dividend Stocks Everyone Should Own for the Long Haul

For investors looking for top-tier dividend stocks to buy and hold for the long term, here are three of my…

Read more »