3 Dividend Stocks Every Investor Should Own

Heading into earnings season, which bank stocks are best for dividend income?

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We’re heading into earnings season for the Big Bank stocks. And yet, while there might be six large banks, not all of them are strong investments to consider. However, when it comes to the three bank stocks we’re going to discuss today, they’re also dividend stocks. Ones that also provide the best option for growth among bank stocks on the TSX today.


So first off, why are these dividend stocks among bank stocks doing well while others aren’t? Analysts suggest that interest rate cuts could alleviate investor concerns related to the credit cycle and stimulate credit demand, especially in the commercial sector. This implies that banks with strong commercial loan growth prospects would be better positioned.

Furthermore, analysts also expressed confidence in factors such as Net Interest Margin (NIM) performance, expense management, and regulatory stability. These factors contribute to a positive outlook for the banking sector as a whole, making it more attractive for investment. So, which are the dividend stocks in the banking sector to consider above all else?

The three dividend stocks

First off, we have Bank of Montreal (TSX:BMO). Despite a challenging start to fiscal 2024, analysts see potential for improvement in BMO’s performance, driven by factors like normalization of revenue items, potential improvement in Capital Markets revenue, and progress on cost-cutting initiatives. This suggests that BMO could rebound from its current challenges.

Then we have Canadian Imperial Bank of Commerce (TSX:CM). CIBC stock has been highlighted for its strong operating leverage performance, driven by industry-leading expense management. Although there might be some increase in expenses due to seasonality and future investment spending, CIBC stock’s overall performance outlook remains positive.

Finally, the biggest of the batch. This would be Royal Bank of Canada (TSX:RY). Analysts expect Royal Bank stock to benefit from strong performance in the Capital Markets business, especially in the U.S. segment. The positive performance of U.S. wholesale players in FICC trading revenue, equities trading revenue, and investment banking fee income indicates a favourable environment for RY’s wholesale business.

Bottom line

What’s great too is that these dividend stocks have operations that support dividend growth. Right now, you can pick up BMO stock with a 4.9% dividend yield as of writing. You can then pick up CIBC stock with a 5.4% dividend yield. Finally, RBC stock with a 3.82% dividend yield is a strong option as well. 

What’s more, these dividend stocks have also been showing higher returns. Shares of BMO stock are up 9% in the last year. CIBC stock has also seen growth, up 19% in the last year. Finally, RBC stock has even climbed past 52-week highs. Shares are now up 13.5% in the last year as of writing. All together, they’re the top three dividend stocks I would consider on the TSX today – ones that will provide solid long-term growth, as well as dividend income as they climb higher.

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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