Market Rout: 3 Top Bank Stocks to Buy Today

Investors should considering adding undervalued bank stocks like TD Bank (TSX:TD)(NYSE:TD) as the market dips.

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The S&P/TSX Composite Index was down 455 points in early afternoon trading on September 20. No one sector had been spared from the carnage at the time of this writing. This is a good opportunity for investors to re-evaluate some of the top equities on the Canadian market. Today, I want to look at three bank stocks that are worth your consideration in this market dip. Let’s dive in.

Why TD is still my top bank stock to buy right now

TD Bank (TSX:TD)(NYSE:TD) is the second-largest Canadian bank my market cap and by total assets. I’d suggested that Canadians should snatch up this bank stock as the economy recovered. Its shares have climbed 13% in 2021 as of early afternoon trading on September 20. However, the stock has dropped 5.6% over the past month.

The bank unveiled its third-quarter 2021 results on August 26. Adjusted net income rose to $10.7 billion in the first nine months of the fiscal year – up from $6.99 billion in Q3 2020. Its Canadian and U.S. retail banking segments both delivered strong growth in the third quarter. Moreover, it benefited from a big dip in provisions set aside for credit losses.

Shares of this bank stock possess a favourable price-to-earnings ratio of 9.6. It last paid out a quarterly dividend of $0.79 per share, which represents a 3.8% yield.

Don’t forget about Canada’s “International Bank”

Scotiabank (TSX:BNS)(NYSE:BNS) boasts an expansive global reach compared to its top peers. This bank stock has increased 12% in the year-to-date period. The stock was down 2.5% in early afternoon trading at the time of this writing.

In Q3 2021, Scotiabank beat expectations and delivered a profit of $2.54 billion – up from $1.30 billion in the third quarter of 2020. It posted provisions for credit losses of $380 million. This was down significantly from the $2.18 billion it cobbled together in the previous year.

Banks have been given some breathing room as the domestic and global economy has recovered. Scotiabank, which boasts a big footprint in Latin America, is well-positioned to benefit in this environment.

This bank stock last had a favourable P/E ratio of 10. Scotiabank still offers a quarterly dividend of $0.90 per share. That represents a very solid 4.7% yield.

Another bank stock that offers great value today

Laurentian Bank (TSX:LB) is a regional bank stock that has consistently punched above its weight on the TSX. Shares of this bank stock were down 2.1% in early afternoon trading on September 20. The stock is still up 28% in 2021.

The bank unveiled its third-quarter 2021 results on September 1. Like its larger peers, it beat expectations and delivered profit of $62.1 million – up from $36.2 million in Q3 2020. Provisions for credit losses was slashed from $22.3 million to $5.4 million, which had a significant impact on its profit generation.

Laurentian Bank stock possesses an attractive P/E ratio of 9.5. It last paid out a quarterly dividend of $0.40 per share, which represents a 3.9% yield.

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 Ambrose O’Callaghan has no position in any stocks mentioned. The Motley Fool recommends BANK OF NOVA SCOTIA.

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