Here’s the Next TSX Stock I’m going to Buy

This valuable stock won’t remain valuable for the rest of 2023, but a dip is coming soon that investors should drink up on the TSX today.

| More on:
Target. Stand out from the crowd

Image source: Getty Images

There are many options out there for investors seeking out a bargain on the TSX today. But if you’re looking for just one TSX stock to consider, the one I’m buying next has to be Royal Bank of Canada (TSX:RY).

Why Royal Bank?

There are a lot of Canadian banks, but definitely far fewer than those in the United States. And yet during a recession, many fear our banks will fall, just as the American ones have — or worse, go bankrupt. Yet this is incredibly unlikely.

Canadian banks don’t have the competition that there is in the United States. Because of this, there are a lot more funds being drilled into them. That means they can afford to put aside provisions for loan losses. This allows them to put those to good use during periods when loan growth is slow — say, during a market downturn such as this one.

Because of this, Royal Bank stock is in a solid position. It’s the largest bank in terms of both assets and market capitalization. Yet there’s more than just past performance to show why you should invest in this stock.

Rich, richer, richest

Royal Bank stock has become the go-to bank stock for wealthy investors, businesses, corporations, and more. Its wealth and commercial management segment as well as its capital markets segments are highly lucrative.

While it doesn’t have the most exposure to other countries, that’s actually seen as a benefit right now. It invests in emerging markets, sure, but mainly it focuses on its lucrative fields. And if it’s not broken, why fix it?

Clearly, shareholders have been convinced over the years. Shares of Royal Bank stock have increased by 116% in the last decade alone. It now also has a dividend yield at 4.03% for investors to consider. Yet with shares down 3% right now, it could be a good time to buy — but not a great time.

Wait for the dip

This is the next stock to buy and not one to buy right now. Royal Bank stock is likely to slip further in the near future due to a possible market downturn and recession. Banks around the world tend to fall when a recession occurs, and Royal Bank stock isn’t immune.

During the Great Recession, shares of Royal Bank stock fell by about 55% from peak to trough! Sure, we’re expecting a mild recession in the near future, but even the recent double-digit fall Royal Bank stock experienced isn’t anywhere near enough.

So, wait for a dip, and when it happens, pick up Royal Bank stock. It’s shown over the decades that it’s a strong option for investors that’s proven its worth again and again. It remains in the top spot and isn’t likely to give it up easily. And while it trades at 12.5 times earnings, it’s still a steal.

Put Royal Bank stock on your watchlist. I know I will.

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 Amy Legate-Wolfe has positions in Royal Bank Of Canada. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

More on Bank Stocks

Question marks in a pile
Bank Stocks

Should You Buy Canadian Western Bank for its 4.8% Dividend Yield?

Down 35% from all-time highs, Canadian Western Bank offers a tasty dividend yield of 4.8%. Is the TSX bank stock…

Read more »

analyze data
Bank Stocks

The Average Canadian Stock Investor Owns This 1 Stock: Do You?

This Canadian stock has about 49% ownership by the public, and with growth and dividends to consider, it's a top…

Read more »

falling red arrow and lifting
Stocks for Beginners

1 Dividend Stock Down 18% to Buy Right Now

CIBC (TSX:CM) is a strong dividend stock investors should certainly consider not just for passive income, but future growth as…

Read more »

edit Business accounting concept, Business man using calculator with computer laptop, budget and loan paper in office.
Tech Stocks

Forget TD Stock: 2 Tech Stocks to Buy Instead

TD remains a solid income stock but two outperforming tech stocks are better buys for their strong growth and upside…

Read more »

Question marks in a pile
Bank Stocks

Where Will Royal Bank of Canada Stock Be in 5 Years?

Royal Bank's continued focus on a strong capital position plus its acquisition of HSBC will likely ensure prosperous times ahead.

Read more »

Payday ringed on a calendar
Bank Stocks

How to Build a Bulletproof Monthly Passive-Income Portfolio With Just $10,000 and TD Stock

TD (TSX:TD) stock has been a poor performer over the last few years, but could be a big passive-income winner…

Read more »

Man considering whether to sell or buy
Bank Stocks

Is RBC Stock a Buy, Sell, or Hold?

Shares of Royal Bank of Canada have delivered game-changing returns to shareholders in the last two decades. Is RBC stock…

Read more »

Dice engraved with the words buy and sell
Bank Stocks

Is Scotiabank (BNS) Stock a Buy, Sell, or Hold?

Let's dive into whether the Bank of Nova Scotia (TSX:BNS) remains a solid buy or if it's more of a…

Read more »