Best Stock to Buy Right Now: National Bank vs. Bank of Montreal?

Two big bank stocks poised to make big moves in 2025 are the best buys right now.

| More on:
analyze data

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The rate-cutting cycle of the Bank of Canada (BOC) in 2024, including super-sized cuts (0.50%) in October and December, was a tailwind for the banking sector. According to BOC governor Tiff Macklem, the cuts will be working their way through the economy. However, he added that the central bank will take a more gradual approach to any further cuts this year.

On the investment front, big bank stocks recovered lost ground. National Bank of Canada (TSX:NA) and Bank of Montreal (TSX:BMO) delivered double-digit returns to investors. Either one is the best stock to buy right now. Both are poised to make big moves this year.

Coming together

National Bank made a takeover bid to Canadian Western Bank last June. The Minister of Finance approved the deal last month, and the transaction should be complete on February 3, 2025. NA and CWB believe that coming together brings tremendous value to shareholders and gives customers a broader range of services.

NA total’s return in 2024 was +34.6%, boosted by the announced merger and a new chapter for Canada’s sixth-largest lender. As of January 10, 2025, NA trades at $132.49 per share and pays a 3.13% dividend. Based on market analysts’ hold recommendation, the potential upside in 12 months is between $140 and $154 per share.

Created with Highcharts 11.4.3National Bank Of Canada PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.ca

The $45 billion bank expects to accelerate growth across all its business lines. “This transaction is about growth and brings together two great banks with a complementary footprint in personal and commercial banking and supports our objectives in Western Canada and across the country,” said Laurent Ferreira, president and chief executive officer (CEO) of National Bank.

By combining the resources of both banks, National Bank will have a larger network and can increase its banking and wealth management activities. CWB retail clients and small business owners will have access to NA’s digital platform and more product offerings.

Ferreira added, “Looking ahead to 2025 in what will remain a complex environment, we will continue to leverage our diversified business model and disciplined approach to credit, capital and costs as we pursue our growth path.” In fiscal 2024 (12 months ending October 31, 2024), NA’s net income rose 16% year over year to $3.82 billion.

Strong foundation

BMO is a no-brainer buy, especially for income-focused investors. The country’s oldest and third-largest financial institution is TSX’s dividend pioneer. This $102.66 billion bank started paying dividends in 1829, and its track record is now 195 years.

Created with Highcharts 11.4.3Bank Of Montreal PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.ca

At $140.65 per share, you can partake in the 4.62% dividend. BMO rewarded investors with a +11.7% return in 2024. Market analysts’ 12-month high price target is $161 (+14.5%). BMO acquired Bank of the West in the U.S. in 2023 and completed the integration in 2024.

In fiscal 2024, net income climbed 65.1% to $7.33 billion versus fiscal 2023, notwithstanding the elevated provisions for credit losses. Darryl White, CEO of BMO Financial Group, said, “We’re entering 2025 with a strong foundation and significant balance sheet capacity for growth.”

All-weather stocks

Canadian big bank stocks are all-weather investments, evidenced by their resiliency regardless of economic conditions. However, NA and BMO will stand out in 2025. Their strategic acquisitions should drive profitable growth.

Should you invest $1,000 in Delta Air Lines, Inc. right now?

Before you buy stock in Delta Air Lines, Inc., consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and Delta Air Lines, Inc. wasn’t one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $20,697.16!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 29 percentage points since 2013*.

See the Top Stocks * Returns as of 3/20/25

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 Christopher Liew has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Confidently Navigate Market Volatility: Claim Your Free Report!

Feeling uneasy about the ups and downs of the stock market lately? You’re not alone. At The Motley Fool Canada, we get it — and we’re here to help. We’ve crafted an essential guide designed to help you through these uncertain times: "5-Step Checklist: How to Prepare Your Portfolio for Volatility."

Don't miss out on this opportunity for peace of mind. Just click below to learn how to receive your complimentary report today!

Get Our Free Report Today

More on Bank Stocks

Middle aged man drinks coffee
Bank Stocks

TD Bank: Buy, Hold, or Sell Now?

TD stock is giving back some recent gains. Is it time to buy?

Read more »

An investor uses a tablet
Bank Stocks

Better Bank Stock: CIBC or Scotiabank?

These two bank stocks offer great dividends and income, but what does the future hold for both?

Read more »

dividends can compound over time
Bank Stocks

Here’s How Many Shares of CIBC Stock You Should Own to Get $2,000 in Yearly Dividends

This dividend stock is a prime option for investors, and it's from more than dividends.

Read more »

shopper buys items in bulk
Bank Stocks

How I’d Allocate $1,000 in Domestic Stocks in Today’s Market

Got $1000? Here's how I'd play the tariff war with Canadian domestic stocks this April! Royal Bank of Canada (RBC)…

Read more »

man touches brain to show a good idea
Bank Stocks

How to Approach Royal Bank Stock in 2025

Royal Bank is down more than 10% in 2025. Is the stock now oversold?

Read more »

Investor wonders if it's safe to buy stocks now
Bank Stocks

Where Will Royal Bank of Canada Be in 2 Years?

Down 12% from all-time highs, RBC stock trades at a sizeable discount to consensus price target estimates in April 2025.

Read more »

open vault at bank
Bank Stocks

3 Canadian Bank Stocks to Shield Against Market Downturns

Canadian bank stocks are some of the best options on the market, and these three are probably the top ones.

Read more »

calculate and analyze stock
Bank Stocks

1 Canadian Stock Down 7% to Buy and Hold for a Long Haul

Now is the time to take advantage of this top-notch Canadian stock, buying it while it's still down.

Read more »