2 Top Financials Stocks to Buy Right Now

Here’s why Toronto-Dominion Bank (TSX:TD)(NYSE:TD) and Manulife Financial (TSX:MFC)(NYSE:MFC) are two great financials stock today.

| More on:
funds, money, nest egg

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn more

Financial stocks have been a go-to preference for investors who want to play it safe in the market yet receive a sizeable return. Investing in financial stocks is also a superb way to diversify your portfolio.

As part of a well-diversified portfolio, financials stocks are a must. And in this context, I think Manulife Financial (TSX:MFC)(NYSE:MFC) and Toronto-Dominion Bank (TSX:TD)(NYSE:TD) are two top picks to consider right now.

Here’s why.

TD Bank

One of Canada’s largest banks, TD is a powerhouse of a financials stock to own today. Indeed, this stock continues to make my list of top picks due to the lender’s long-term track record of providing meaningful total returns for investors.

Between TD’s dividend yield of 3.6% and the bank’s long-term capital appreciation record, investors have been able to amass some serious wealth over recent decades owning this gem. I don’t see things changing on the horizon in this front.

TD’s recent earnings have highlighted this performance. In fact, TD’s results surpassed analyst expectations by a wide margin. The company’s Q1 adjusted income of US$3.38 billion came in higher year over year, as the effects of the pandemic wind down. Indeed, for those who view greener pastures ahead, this is a great pick right now.

The company’s also been streamlining its operations of late. Via cutting out unprofitable branches and leveraging technology to do so, TD hopes to provide long-term investors with boosted returns. These moves ought to pay dividends (figuratively and literally) over the long haul. Accordingly, I think TD’s CAGR of 15% over the long term is likely to remain in place for some time.

Manulife

An undervalued financials stock, Manulife certainly looks cheap at these levels.

This large-cap insurer continues to churn out great results as well as a relatively juicy dividend yield of 4.5% for investors.

The company was quick to recover from the pandemic-induced turmoil we saw last year. Indeed, Manulife’s exposure to Asian markets and its global growth profile in general, make it a much more geographically diversified and defensive option than its peers right now.

I think investors seeking growth at a reasonable price ought to consider companies like Manulife right now. Indeed, Manulife trades at a discount from a valuation perspective to the big banks. Those seeking value today have a few great options. Manulife and TD both offer great risk/reward potential for such long-term investors. Indeed, these two stocks ought to remain atop the watch lists of investors seeking diversification today.

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 Chris MacDonald has no position in any of the stocks mentioned.

More on Dividend Stocks

Payday ringed on a calendar
Dividend Stocks

How to Convert $500 Monthly Investment Into $200 Monthly Income

If you want the stock market to give you regular monthly income, you have to invest in the stock market…

Read more »

worry concern
Dividend Stocks

3 Ultra-Safe Dividend Stocks for Jittery Investors

Motley Fool investors nervous about the market downturn should consider these ultra-safe dividend stocks that keep paying passive income no…

Read more »

House Key And Keychain On Wooden Table
Dividend Stocks

Is the Real Estate Boom Finally at an End?

It might be hard to believe, but Canada’s decades-long housing boom might be at an end.

Read more »

Caution, careful
Dividend Stocks

3 Mistakes to Avoid When Investing in a Recession

Avoid making these crucial investing mistakes during market downturns to protect your investment portfolio.

Read more »

Various Canadian dollars in gray pants pocket
Dividend Stocks

2 Dividend ETFs for Easy Passive Income

Canadians can earn generous passive income the easy way from two dividend ETFs with monthly payouts.

Read more »

Payday ringed on a calendar
Dividend Stocks

TFSA Pension: How Retired Couples Can Get an Extra $815 Per Month in Tax-Free Passive Income

Retirees now have an opportunity to buy top dividend stocks at cheap prices to generate high-yield, tax-free passive income inside…

Read more »

exchange traded funds
Dividend Stocks

2 Dividend-Paying ETFs You Can Buy in 2022

These two dividend-paying ETFs in Canada allow them to earn a steady stream of passive income.

Read more »

Dividend Stocks

Attention Canada: It’s Time to Buy These REITs in Your TFSA

Rising interest rates created a correction in REIT prices. It’s time to buy some REITs in your TFSA and lock…

Read more »