For those looking to put $1,000 to work in the TSX, there are plenty of options to consider. Canada’s stock market is filled with companies that provide decent dividends, stable and growing earnings, and the potential for growth. There are a number of no-brainer financials stocks that may certainly fall into this bucket.
Canada’s banking system is as robust as it is unique. With only a handful of major banking institutions handling the lion’s share of the country’s banking needs, picking among these behemoths is a difficult task.
That said, I do think the following two companies are ones I’d put in the no-brainer financials stocks worth considering right now. For those looking to build a long-term portfolio, here are two companies I think ought to be considered right now.
Toronto-Dominion Bank
One of the largest and most well-respected banks in Canada, Toronto Dominion Bank (TSX: TD) is an important part of Canada’s financial sector. The organization operates in three different business segments, which are, U.S. retail banking, Canadian retail banking, and wholesale banking. TD is also popularly known as an excellent dividend stock in the market and for the last two decades, its shares have consistently paid investors in every quarter.
Moreover, TD stock remains a top dividend option for long-term investors. With a current yield of 5.3%, investors have had strong double-digit total returns fueled by these dividends, with nearly half of the company’s total return profile due to the company’s strong payout history.
These dividends are made possible by an incredibly robust cash flow growth profile. With a growing presence in the U.S. market, TD has become a retail behemoth, with strong capital markets and wealth management businesses that add stability during various market cycles. So, no matter which sort of economic climate we’re headed into, TD will remain a top way to play the Canadian banking sector.
It’s this U.S. exposure that makes me most bullish on TD. For those looking for a way to amplify growth in the banking sector and are looking to the U.S. market for this growth, TD remains one of the best geographically positioned banks in Canada to consider.
Scotiabank
Bank of Nova Scotia (TSX: BNS) is another global financial service provider and has five different segments in its business. It includes global wealth management services, Canadian banking, global banking, markets, and international banking.
Like TD, one of the things I like most about Scotiabank is the company’s international exposure. While Scotiabank does have a small presence in the U.S., its focus outside of Canada is mostly within higher-growth countries in Central and Latin America. For those bullish on the growth prospects those economies provide over the long-term, this is an excellent pick.
Additionally, on the dividend front, Scotiabank’s 6.5% yield is among the best in its large-cap financials group. I think this is a no-brainer financials stock for those seeking steady and growing passive income in retirement.
Of course, anything could happen, and we have seen periods of time when regulators won’t allow dividend increases. But all in all, the bank’s solid balance sheet and the regulatory framework in Canada make Scotiabank a company worth considering.
Right now, I’m considering adding exposure to both banks on any significant dips moving forward. These are the kinds of companies that are worth owning over the long-term, and picking shares up when they’re cheap is the best way to gain exposure to this sector, in my view.
