Canada’s big bank stocks are often mentioned as some of the best long-term options for any portfolio. There are actually a few good reasons for that option. Apart from the stability they offer, the big banks also boast juicy yields and strong growth potential.
But which of Canada’s big bank stocks should you consider for your portfolio? Let’s try to answer that question by looking at a few options.
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A healthy focus on Canada, with some international growth sprinkled in
Canadian Imperial Bank of Commerce (TSX: CM) is the first of Canada’s big bank stocks that investors should consider. Specifically, CIBC is appealing to investors looking to generate a reliable (and growing) dividend that is highly defensive.
That defensive appeal is because CIBC lacks the international exposure that its larger peers offer. Instead, the bank is focused on the domestic market, where it enjoys a significantly larger mortgage book over its peers.
That’s not to say CIBC hasn’t expanded internationally. The bank does have a presence in the U.S. market which provides a healthy bump during earnings season.
Turning to income, CIBC offers investors a respectable 4% yield making this bank a solid option for investors looking for stable income.
What about Canada’s most international bank?
Canada’s big bank stocks are known for their stability at home, which is thanks to a variety of factors. This also means that the big banks need to look to international markets for growth.
That’s why prospective investors looking at growth from Canada’s big bank stocks should consider investing in Bank of Nova Scotia (TSX: BNS).
Scotiabank isn’t the largest of the big banks, but it does offer a very juicy yield and significant long-term growth prospects.
As of the time of writing, the yield on Scotiabank’s quarterly dividend works out to a tasty 5.3%, making it one of the better-paying dividends on the market.
Turning to growth, after nearly a decade of focusing on high-growth Latin American markets, Scotiabank announced this year that it would be refocusing its growth efforts on the U.S. market. In fact, Scotiabank recently announced a 14.9% stake in KeyCorp for US$2.8 billion.
In short, Scotiabank is a hard-to-ignore option for prospective investors looking for a tasty dividend and strong growth prospects.
A growing presence in the US comes with an opportunity to buy low
Another of the big bank stocks to consider buying right now is Toronto-Dominion Bank (TSX: TD). TD Bank is the second largest of the big banks and boasts a huge branch network both in Canada as well as in the U.S.
TD’s presence in the U.S. grew largely thanks to a series of well-executed acquisitions following the Great Recession. TD then stitched those acquisitions into a branch network stretching from Maine to Florida along the East Coast.
Despite that growth appeal, TD has underperformed its peers this year, dropping 7%. That dip can be attributed to TD’s troubles with U.S. regulators.
The bank was called out for not having sufficient systems in place to identify and prevent money laundering. This led to the bank being hit with a near US$3 billion fine as well as an asset cap on TD’s U.S. business.
There’s no doubt that TD will continue to grow once that asset cap clears. Until then, prospective long-term investors can buy TD at a discounted rate and enjoy the 5.2% yield.
Canada’s big bank stocks: Which bank is best for your portfolio?
All of the big bank stocks mentioned above can provide long-term growth as well as a juicy income. Additionally, they all provide some defensive appeal, which is a huge plus in times of volatility.
In my opinion, one or all of the big bank stocks above should be core holdings in any well-diversified portfolio.
Buy them, hold them, and watch them (and your future income) grow.
