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.
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.
The 10 Best Stocks to Buy This MonthClick here to learn more!
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.
Like these top financials picks? Here are a few more great stocks to choose from:
Renowned Canadian investor Iain Butler just named 10 stocks for Canadians to buy TODAY. So if you’re tired of reading about other people getting rich in the stock market, this might be a good day for you.
Because Motley Fool Canada is offering a full 65% off the list price of their top stock-picking service, plus a complete membership fee back guarantee on what you pay for the service. Simply click here to discover how you can take advantage of this.
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.