The Top 3 Canadian Bank Stocks to Bulk Up Your TFSA

TD Bank (TSX:TD) and other top Canadian bank stocks are worth stashing in your TFSA after first-quarter earnings season.

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Canadian bank stocks have a stellar reputation among domestic and international investors. These profit machines proved resilient in the face of the 2007-2008 Financial Crisis. The top banks have passed through the first-quarter earnings season in late February and early March. Today, I want to look at three top bank stocks that I’d look to stash in a Tax-Free Savings Account (TFSA) in March. Let’s jump in.

This giant bank stock is set to release its earnings this week

TD Bank (TSX:TD) is the second largest of the Big Six Canadian banks. Beyond its huge domestic presence, TD Bank is also one of the largest retail banks in the United States. Shares of this bank stock have dropped 10% year over year as of close on March 2. The stock has increased marginally so far in 2023. Investors can take a more in-depth look at its recent performance with the interactive price chart below.

This bank unveiled its first-quarter fiscal 2023 earnings on March 2. TD Bank reported adjusted net income of $4.15 billion, or $2.23 per diluted share — up from $3.83 billion, or $2.08 per diluted share, in the first quarter of fiscal 2022. The bank’s Personal and Commercial Banking segment posted revenue growth of 17% to $4.58 billion and net income growth of 7% to $1.72 billion. Meanwhile, its U.S. Retail Banking segment achieved record net income of $1.58 billion — up 25% from the previous year.

Shares of this bank stock currently possess a favourable price-to-earnings (P/E) ratio of 9.3. TFSA investors can also count on its quarterly dividend payout of $0.96 per share. That represents a 4.3% yield.

I’m still looking to stash this undervalued bank stock in my TFSA

Scotiabank (TSX:BNS) is the second bank stock I’d look to snatch up in our hypothetical TFSA in early March. This bank is sometimes referred to as “The International Bank” due to its large global presence, particularly in Latin America. Its shares have plunged 26% from the prior year. However, Scotiabank has jumped 5.4% in the year-to-date period.

The bank released its first-quarter fiscal 2023 results on February 28. Adjusted net income rose to $2.36 billion, or $1.85 per diluted share — down from $2.75 billion, or $2.15 per diluted share in the prior year. Canada’s economy has slowed in the face of higher interest rates while Latin America’s top economies, like Brazil, are still in a post-pandemic recovery mode.

Scotiabank stock last had a very attractive P/E ratio of five. This stock offers a quarterly dividend of $1.03 per share, which represents a very strong 5.9% yield. TFSA investors should be driven to snag Scotiabank for its superior value and income compared to its peers.

CIBC proved worthy of a TFSA stash with its first-quarter earnings

Canadian Imperial Bank of Commerce (TSX:CM) is the third and final bank stock that looks like a fantastic buy for your TFSA in the final weeks of the winter. This bank stock has dropped 22% compared to the previous year. Its shares have surged 11% so far in 2023.

This bank was the first of the Big Six to unveil its first-quarter FY2023 earnings on February 24. CIBC reported revenue of $5.92 billion — up 8% compared to the first quarter of fiscal 2022. Meanwhile, adjusted net income came in at $1.84 billion, or $1.94 per diluted share — down 6% and 5%, respectively, compared to the prior year. Its best-performing segment was Capital Markets, which achieved net income growth of 13% to $612 million.

Shares of this bank stock possess a solid P/E ratio of 12. Meanwhile, CIBC offers a quarterly dividend of $0.85 per share, representing a strong 5.4% 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 positions in Toronto-Dominion Bank. The Motley Fool recommends Bank Of Nova Scotia. The Motley Fool has a disclosure policy.

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