After consistently sliding for three months in a row, the TSX Composite benchmark regained investors’ confidence last month due mainly to hopes that the central banks in the United States and Canada will soon pause interest rate hikes. This is one of the key reasons why the main TSX index rallied by 7.2% in November. However, macroeconomic challenges are still haunting investors as a high interest rate environment and inflationary pressures are likely to continue hurting corporate earnings in the near term.
In such unpredictable economic phases, investors should ideally hold some reliable blue-chip stocks in their portfolios to protect their investments from market volatility. In general, blue-chip stocks are shares in large-cap, well-established companies with a long history of stable financial performance. Investing in them can be less risky, because these companies are usually financially stronger than most growth companies. In this article, I’ll highlight two of my favourite TSX blue-chip stocks you can buy in December 2023.
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Canadian Imperial Bank stock
Canadian Imperial Bank of Commerce (TSX:CM) has been among the top-performing, large-cap Canadian bank stocks of late. CM stock has risen 12.1% in the last month to currently trade at $58.25 per share. At the current market price, the stock has a market cap of $53.8 billion and offers an attractive 6.2% annualized dividend yield.
The recent rally in Canadian Imperial’s share prices could be attributed to its better-than-expected latest quarterly earnings. In the fourth quarter of its fiscal year 2023 (ended in October), the Toronto-headquartered lender’s total revenue rose 8.5% YoY (year over year) to $5.84 billion with the help of strong growth in its non-interest income. More importantly, the bank posted about a 13% YoY increase in its adjusted quarterly earnings to $1.57 per share, with strong performance across segments, exceeding analysts’ expectations of $1.53 per share.
As the macroeconomic scenario gradually improves in the next year, Canadian Imperial Bank’s financial growth trends are likely to improve further, which should help this TSX blue-chip stock trade positively.
Bank of Montreal stock
Bank of Montreal (TSX:BMO) could be another top blue-chip stock on the TSX to consider in December 2023. After losing nearly 6.6% of its value in the first three quarters of 2023, its share prices have staged a healthy recovery in the last few weeks. This blue-chip stock has risen around 11% in the last month to currently trade at $119.26 per share and a market cap of $85.9 billion. BMO has a decent 5.1% annualized dividend yield at this market price and distributes its dividend payouts every quarter.
With the help of positive contributions from its recent acquisition of Bank of the West and the strong performance of its Canadian personal and commercial banking segments, the Bank of Montreal registered a 7.2% YoY increase in revenue to $28.4 billion for its fiscal year 2023 (ended in October). However, weakness in its wealth management and corporate services segments due mainly to ongoing macroeconomic challenges drove its adjusted annual earnings downward.
As the U.S. Federal Reserve and Bank of Canada are expected to start easing their monetary stance in the coming quarters, a favourable lending environment could boost the Bank of Montreal’s well-diversified financial services business and drive its stock higher. Considering that, I find this TSX blue-chip stock really attractive to buy in December 2023 and hold for the long term.
