Better Buy: Royal Bank Stock or CIBC Stock?

Both of these banks have provided investors with long-term rewards, but which is the better buy to get out of this downturn?

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The Big Six banks are some of the best performers on the TSX today. In fact, they have been some of the best performers for decades now. And that includes up until most recently, with the banks proving their worth by having plenty of provisions for loan losses.

And as the market heats up once again, with interest rates coming down and loans taken out more often, these banks will be worth their weight in gold.

Today, we’re going to look at the biggest of the best — the biggest in terms of market cap, and the biggest in terms of share growth and dividend. Then, we can nail down which bank is best: Royal Bank of Canada (TSX:RY) or Canadian Imperial Bank of Commerce (TSX:CM)?

The case for RBC stock

Let’s first go to the biggest stock — not just of the Big Six banks but on the TSX today. With a market cap of $189.66 billion, RBC stock easily takes the top spot on the TSX. Founded in 1864 in Halifax, Nova Scotia, RBC stock has grown into a global financial services provider with operations in Canada, the United States, and around the world.

The bank offers a wide range of banking, wealth management, insurance, investment, and capital markets products and services to individuals, businesses, and institutions. It operates through several segments, including Personal & Commercial Banking, Wealth Management, Insurance, Investor & Treasury Services, and Capital Markets.

Yet it’s the wealth management that’s really seen the most growth and steady income. No matter the market, clients want their money managed well. However, RBC stock took it a step further and recently purchased HSBC Canada. This will add an entirely new stream of high-income newcomers to RBC.

The stock has been stable, steady, and growing well the last year. Shares are up 24% since the October bottom, and it currently holds a dividend yield at 4.12% as of writing.

The case for CIBC stock

Now, let’s go to the best bank for dividends. And perhaps for growth in returns if you’ve been paying attention recently. CIBC stock may not have the girth of RBC stock, but it does have the loyalty, with a focus on customer satisfaction that has kept its clients in hand and growing. 

Established in 1867, CIBC has grown to become one of the biggest banks in Canada. While it might have a smaller market cap at $61.3 billion, it’s still in third place among the banks. CIBC’s core business segments include Retail and Business Banking, Wealth Management, and Capital Markets. The bank is known for its focus on innovation and customer service, often introducing new digital banking solutions and technologies to enhance the customer experience.

Now, the issue for investors in the past is that CIBC stock is heavily invested in Canada and, thus, the housing market. This was a worry for investors wanting the company to pull back its dependence on its loan portfolio. However, CIBC stock instead has seen growth in the last few quarters, surging past most recent estimates.

So, with a dividend yield of 5.51% and shares up 35%, this has been a top growth stock among the Big Six banks.

Bottom line

Depending on what you want, both of these banks look like solid options. RBC stock is a strong long-term hold that continues to find lucrative ways of bringing in revenue and offering more stability. CIBC stock is a great option for those wanting dividends as well as quick growth out of this downturn. In any case, both are wonderful options to consider for your portfolio. 

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 Canadian Imperial Bank Of Commerce and Royal Bank Of Canada. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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