There are many of us looking at the TSX today and wondering if there are opportunities to be had. Where are the diamonds in the rough that we can invest in that are bound for riches?
While nothing is for sure, the Canadian banks are likely to come back strong, making you rich beyond what you thought possible. In fact, now could be the best time to invest for a turnaround in 2024.
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Why Canadian banks?
The Canadian “Big Six banks” are quite different when it comes to banking institutions in the world. These banks enjoy an oligopoly, with limited competition when it comes to performance. There are high barriers to entry, resulting in safeguards for the Big Six from competition.
Furthermore, these companies are known for their strong regulatory environment as well as conservative lending practices. Not only has this resulted in stronger companies but fewer failures, even during economic downturns.
In fact, there has not been a banking crisis in Canada since 1837! That’s almost 200 years of overall stability, making it through the Great Depression, stagflation, recessions, and more.
Dividend powerhouses
Furthermore, these companies offer dividends. So, if you’re worried about performance over the next few quarters, then you can at least be sure that you’ll continue to have dividends come your way. In fact, banks also have a long history of not just paying them but increasing them, even in trying times.
These banks now have decades, if not over 100 years, of dividend payments. These dividend payments usually offer high yields as well. Even with the recent dip in the markets, Canadian bank stocks have offered attractive dividend yields for investors seeking income. Therefore, when the stocks recover, you’ll receive far more dividends along with your returns.
But which are the best of the best for those seeking riches? Let’s consider investing in Royal Bank of Canada (TSX: RY), Toronto-Dominion Bank (TSX: TD), and Bank of Nova Scotia (TSX: BNS).
Why these three?
When it comes to investing in Canadian banks, these three are the largest by market capitalization. That size translates over to greater financial resources, resilience, and larger acquisitions, as well as expansion opportunities. All three provide these things along with diversification across everything from wealth and commercial management to insurance and capital markets.
Furthermore, RY stock, TD stock and BNS stock all report strong financial performance. They provide healthy profits, solid capital positions, and efficient cost management. This has delivered reliable dividend growth as well as returns.
Finally, when it comes to these three, each has its own strengths. RY stock offers the largest wealth management arm, and that’s growing further with the acquisition of HSBC Canada. TD stock has a leading position in the United States market for growth potential after the downturn. BNS stock provides more exposure to Latin and South American companies as well, which could provide high-growth opportunities.
RY stock is up 71% since bottoming out with a 4.14% dividend yield as of writing. TD stock offers a 5% dividend yield, with shares up 7% since bottoming out. BNS stock, meanwhile, is up 19%, with a 6.6% dividend yield. Overall, when it comes to getting rich in 2024, these companies are the best of the best.
