Financial stocks may be your best bet today on the Toronto Stock Exchange. Canadian bank stocks have a stellar reputation for issuing dividends even during times of economic strain. Investors may be worried about the COVID-19 pandemic today, but all of this is temporary.
The best way to manage investment stress is to keep cash savings to tide you over through difficult financial times. If the value of your retirement portfolio falls, you won’t have to worry about selling your investments at a loss.
Many professional financial managers are indicating a new trend away from technology stocks and into the financial sector. Here are two bank stocks that you might consider buying today.
Toronto-Dominion Bank remains strong despite COVID-19 pandemic
Toronto-Dominion Bank (TSX:TD)(NYSE:TD) went from a 52-week high of $77.72 prior to the COVID-19 pandemic to a 52-week low of $49.01. At the time of writing, investors are trading the stock for $60.17 per share. The annual dividend yield at this market price is now 5.25%.
This stock would provide your retirement portfolio, Tax-Free Savings Account (TFSA), or Registered Retirement Savings Plan (RRSP) with a nice income even if the market dips lower again this year.
Toronto-Dominion Bank CEO Bharat Masrani commented on the financial institution’s strong earnings and volume growth from the second quarter of the year:
“Earnings improved from the second quarter, as continued volume growth, moderating credit provisions and strong wealth and wholesale revenues helped offset further margin pressure. The improved performance in our Canadian and U.S. Retail segments, and the record contribution from our Wholesale Banking segment, demonstrate the resilience of our diversified business model and the power of our customer-centric strategy.”
Banks are generally very good investments. The market value of these stocks might fall in times of economic stress. Nevertheless, their long-term performance outweighs these short-term concerns. If you are a long-term investor who wants to buy while the market is trading lower, Toronto-Dominion Bank is a top stock to buy today.
Bank of Nova Scotia stock issues a top dividend yield
Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) fell to a 52-week low of $46.38 after the March 2020 market crash. Prior to the crisis, investors were buying the stock near a 52-week high of $76.75. At the time of writing, the stock is trading for $54.13 per share.
The dividend yield on the Bank of Nova Scotia stock is higher than that of Toronto-Dominion Bank at 6.65% annually. Any retirement portfolio should welcome this stock with open arms, especially at the prices it is trading for today.
Brian Porter, President & CEO of Scotiabank noted the bank’s resiliency throughout the COVID-19 pandemic:
“Scotiabank continues to focus on its customers while remaining operationally resilient during the COVID-19 pandemic. The Bank has strong capital and liquidity ratios and has reserved conservatively for estimated future loan losses. While our retail banking businesses in Canada and international markets were adversely impacted by the pandemic, the Bank’s performance was aided by strong results in Global Banking and Markets and Wealth Management. Focusing on our strategy and making prudent decisions that benefit all stakeholders – our shareholders, customers and employees – will result in a stronger Bank,” said Brian Porter, President and CEO of Scotiabank.
Investors should not be too afraid of short-term falls in stock market values as long as they have cash on hand today to meet their living expenses. That’s where responsible investing comes into play. If you are stressed about the stock market, then ensure that you have a cash emergency fund and remind yourself that you have time to wait for the market to rebound.
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 Debra Ray has no position in any of the stocks mentioned. The Motley Fool recommends BANK OF NOVA SCOTIA.