Royal Bank of Canada (TSX:RY) or Toronto-Dominion Bank (TSX:TD) – wondering which is the better buy?
Both of these stocks are among the largest banks in the country with significant market share and size. Both are backed by solid fundamentals, and have seen strong growth in the latest quarter despite fears in the housing market. So, choosing one over the other can be a bit difficult.
That said, let’s dive into both stocks, and see if we can determine which is the best pick right now.
Royal Bank of Canada
Royal Bank of Canada is one of the largest financial institutions in Canada and among the largest banks in the world in terms of its market capitalization. It offers a wide variety of financial services such as banking products, insurance, wealth management services, capital market services, and treasury and investor services. RBC has a 150-year history of operations and a presence in 27 countries other than Canada and the USA.
The board of RBC recently announced a dividend pay-out of $1.38 per share, which is payable on or after February 23. In the company’s fourth quarter report, RBC showed adjusted net income of $16.1 billion, leading to 2% year-over-year growth in the company’s bottom-line.
Toronto-Dominion Bank
TD Bank is one of the largest financial institutions in Canada. It offers a wide variety of financial services through its various banking segments such as retail banking, corporate banking, wealth management, and so forth. TD also offers an array of services revolving around the capital markets, corporate banking products, and various other corporate banking requirements through its corporate banking channel.
TD Securities, which is one of the subsidiaries of Toronto Dominion Bank, recently announced its expansion plans. According to this plan, the company will start offering investment banking services along with other offerings such as equity capital markets, equity research, equity sales, and debt capital markets.
Additionally, Toronto Dominion Bank recently declared a dividend of $1.02 per share for its shareholders this most recent quarter. According to the dividend reinvestment plan, investors are allowed to reinvest the same in additional common shares.
The verdict
Both Royal Bank of Canada and Toronto Dominion Bank have always been among the top stocks in Canada. It is a bit difficult to choose one over the other without going through the fundamentals of the company and the current price of these stocks.
That said, it’s my view that TD is likely the higher-growth option over the long term, and has provided superior total returns over most timeframes in recent history. If I had to pick, TD would come out on top. That said, for those looking for a more defensive option (worried about continued strain in the banking sector in 2024 and beyond), Royal Bank is the safer pick. Choose accordingly.
