Passive income investors have a lot to love about Canada’s top bank stocks at this juncture as they look to slog through another year. Even if the banks can’t catch a break over the coming quarters, I do view them as an attractive play for the next three to five years.
They may be a tad on the untimely side right now as they move into more quarters that stand to be weighed down by a weak macro climate. That said, the risk/reward (value to be had today) stands out as long as you consider yourself a long-term investor, willing to embrace the ups and downs that will come your way over the coming months and quarters.
Without further ado, let’s have a peek at two intriguing Canadian bank stocks that I believe may be worth banking on for the new year. Should income investors ring in the new year with a bank stock buy? Let’s have a closer look!
TD Bank
TD Bank (TSX:TD) stock didn’t rally as much as its peer group since bottoming out in the back half of 2023. Indeed, many bank stocks began to really heat up in the final weeks of last year. And though TD stock is still up around 8% from its 52-week lows, it remains off around 23% from its early 2022 highs.
With shares in a period of consolidation, and muted quarters already expected ahead, TD stock seems like more of a wait-and-see play through the eyes of gain-hungry investors. That said, by sitting it out and waiting for the tides to turn, you will be able to collect that incredible dividend!
At writing, shares yield a nice 4.96%. And at 14.7 times trailing price-to-earnings, you’re not really paying an expensive price to punch your ticket into the name, especially if earnings end up a tad better than anticipated this year!
Either way, TD Bank is a great dividend heavyweight to play the long game with. 2024 may be another sideways year, but at the very least, you’ll have the dividend payments to show for it!
Bank of Montreal
Up next, we have Bank of Montreal (TSX:BMO), which exploded higher since bottoming out back in October 2023 at around $102 and change per share. Today, shares go for over $130, up more than 26% from its recent lows. Looking ahead, I think the good times can keep going as the bank looks to claw back to highs it hasn’t seen in around two years.
The stock yields 4.64%. Not nearly as bountiful as the likes of TD. However, I do think BMO stock remains a well-run bank that income investors should have at the top of their radars if dividends and growth are what they seek.
Technically speaking, BMO stock seems more timely than TD stock, given its newfound momentum. As the big bank wanders into earnings season, look for management to pull a potential surprise out of the hat. Expectations are quite tame, making the needle-moving effects of a beat potentially prominent as we wander into the Spring season.
