When it comes to reliable income, Canadian bank stocks can be some of the best. These companies over time have absolutely soared, even making millionaires. This comes from making long-term investments, and buying up the dips.
Which is exactly what investors should be doing right now, especially for companies Canadian Imperial Bank of Commerce (TSX:CM) and Bank of Montreal (TSX:BMO). Both are down from 52-week highs, but have proven their worth in the last 100 or more years! So let’s get into what makes them so attractive today.
CIBC
CIBC stock has recently shown promising performance, with its Q2 2024 earnings surpassing analyst expectations. The bank reported earnings per share (EPS) of $1.75, outperforming the consensus estimate by $0.09, plus revenue growth of $6.2 billion. Despite this, the stock has experienced volatility, partly attributed to insider sales, raising concerns among some investors about future performance.
Now, investors should see the recent performance and August earnings report with cautious optimism. The company provides a robust dividend yield of approximately 5.2% as of writing, providing a steady income stream for investors. CIBC stock also boasts a return on equity (ROE) of 11.9%, indicating efficient use of shareholder funds to generate profits. With a net margin of 29.5%, CIBC also demonstrates effective cost management and profitability.
Altogether, the dip in CIBC stock presents a buying opportunity for investors. Strong financial performance, an attractive dividend yield, and efficient profitability metrics certainly make it worth your while. Despite insider sales raising short-term concerns, the long-term outlook remains positive, supported by solid earnings growth and favourable analyst coverage.
BMO
BMO has similarly shown resilience in its financial performance. The bank’s recent quarterly results have been strong, contributing to positive investor sentiment. Despite market fluctuations, BMO’s stock remains a solid investment due to its robust business model and consistent performance.
Where the bank has particularly shown strength is through its ongoing strong dividend and growth prospects. BMO offers an attractive dividend yield currently at 5.2%, making it a compelling option for income-focused investors. The bank’s diversified revenue streams and strategic expansions also position it well for future growth. This is supported by an 8.2% ROE and 20% net margin.
Analysts are generally bullish on BMO, with recent upgrades and optimistic price targets reflecting confidence in the bank’s future prospects, particularly in the United States. The current dip in BMO’s stock is an opportunity to invest in a financially strong institution with a proven track record. Its high dividend yield and strong growth prospects make it an appealing choice for investors seeking both income and capital appreciation.
Conclusion
Both CIBC and BMO represent strong investment opportunities on the TSX. This is particularly true during periods of stock price dips. The robust financial performance, attractive dividend yields, and positive growth prospects make each suitable for investors looking to capitalize on market fluctuations. And with a strong history of coming back after every market downturn, now makes it perhaps the best strategic time to buy the dip in these two bank stocks.
