Are you invested in Canada’s big bank stocks? The banks are often regarded as some of the best investments to consider for any well-diversified portfolio. But which of those bank stocks is the best one for you to purchase now?
Here’s a look at several of Canada’s big bank stocks and why they belong in your portfolio
Source: Getty Images
Strong growth and a huge opportunity
Let’s start by taking a look at Toronto-Dominion Bank (TSX: TD). TD is the second largest of Canada’s big bank stocks. In addition to a sizable branch network at home, TD operates an impressive network in the U.S.
That U.S. network is also where TD has focused, at least until recently, on fueling its growth. TD boasts well over 1,200 branches in the U.S., in a network stretching from Maine to Florida.
The reason TD’s growth focus shifted has to do with a ruling by U.S. regulators. That ruling found that TD didn’t do enough to stop money laundering in the United States. As a result, it was slapped with a hefty $3 billion fine and an asset cap placed on its U.S. business.
TD has already paid that fine and is staying within its asset cap. In fact, TD recently sold off some larger mortgages to keep within that cap. That cap has also led TD to shift its growth focus, at least temporarily, back home to Canada.
To kickstart that growth, TD recently announced the sale of its stake in Schwab. The sale is expected to bring in $20 billion, funding growth at home as well as a share buyback.
Apart from its growth-oriented approach, TD also boasts a healthy dividend. As of the time of writing, TD pays out a handsome 4.96% yield. Adding to that appeal is the fact that TD continues to provide investors with annual upticks to that dividend.
In short, TD appeals to investors looking for a long-term investment that can provide income and growth.
Speaking of growth, here’s another bank stock
Another one of Canada’s big bank stocks to consider buying right now is Bank of Montreal (TSX: BMO). BMO is the oldest of Canada’s big bank stocks, with nearly two centuries of uninterrupted dividend payments to investors. As of the time of writing, BMO’s quarterly yield is 4.44%. Like TD, BMO has provided annual upticks to that dividend for years.
While that juicy dividend may satisfy the needs of income-seeking investors, BMO is also a growth story.
In recent years BMO has invested heavily into growth, primarily in the U.S. market. It’s that focus on the U.S. market that has led BMO to become one of the largest lenders in that market. Much of that growth can be attributed to the acquisition of California-based Bank of the West.
That deal added billions in deposits across millions of new customers in multiple state markets. It also helped BMO expand to an impressive 32 state markets.
In other words, BMO is an appealing option for investors looking for both growth and stable income from Canada’s big bank stocks.
Which of Canada’s big bank stocks will you pick?
Both TD and BMO offer investors growth and income-earning capabilities. TD’s higher yield appeals to income-seekers, while BMO’s uninterrupted growth in the U.S. draws in growth-seeking investors.
Ultimately, investors in one or both of these bank stocks will not be disappointed.
In my opinion, one or both of these stocks should be core holdings in any well-diversified portfolio.
Buy them, hold them, and watch them grow.
