Canada’s financial stocks are among the best contenders to include in any well-diversified portfolio. Those stocks can provide both growth and a lasting income to investors for decades.
But where should investors, particularly those who are newer to investing, begin? There’s a basket of options to consider when looking at those top Canadian financial stocks and each comes with their own respective advantages.
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Let’s start with a strong growth candidate
Toronto-Dominion Bank (TSX: TD) is the second-largest of Canada’s big bank stocks. Like its peers, TD has a strong domestic network that generates the bulk of its revenue. Where the bank differs, however, is with respect to international presence.
TD’s growth is focused on the U.S. market, and that network has seen impressive growth over the past decade. That’s because, in the years following the Great Recession, TD acquired several regional banks and stitched them together.
The result of that effort was the impressive network TD has today, which today stretches from Maine to Florida. While that is an impressive feat that generates an increasing amount of revenue, TD’s presence in Canada should not be discounted.
That domestic segment comprises over 1,100 branches and is a key reason behind TD’s reliable dividend. That quarterly dividend pays out an impressive 4.92% yield. Like the other big banks, TD has also established a cadence that provides annual upticks to that dividend going back years.
That fact alone makes TD one of the top Canadian financial stocks to own for the long term.
How about a high-yield international bank?
Another one of the top Canadian financial stocks for investors to consider right now is Bank of Nova Scotia (TSX: BNS). Scotiabank has the label of being Canada’s most international bank thanks to its impressive international exposure.
That international presence has, until recently, focused on Latin American markets. Latin America offers higher growth potential, but that comes with significantly more risk. To counter that risk, Scotiabank has shifted its growth focus to the U.S. market, where profitability is more stable.
Turning to dividends, Scotiabank offers investors a tasty quarterly dividend. As of the time of writing, Scotiabank offers investors a tasty 6.16% yield. That makes it one of the best-paying dividends on the market.
Scotiabank has also provided investors with annual upticks to that dividend going back years without fail. This fact alone makes the bank one of the top Canadian financial stocks to buy right now.
Perhaps best of all is that future appeal. Between the strong growth prospects and annual upticks, Scotiabank is a superb buy-and-forget candidate for any portfolio.
Note that prospective investors who aren’t ready to draw on that income can choose to reinvest those dividends until needed. This will allow any eventual income to continue growing for what could be decades.
In other words, Scotiabank is one of the top Canadian financial stocks to buy now and hold for decades.
Will you buy these top Canadian financial stocks?
No stock, even the most defensive, is not without some risk. Fortunately, in the case of the above top Canadian financial stocks, they offer investors both a juicy dividend and plenty of defensive appeal.
In my opinion, one or all of the above stocks should be core holdings as part of any well-diversified portfolio.
Buy them, hold them, and watch them (and your future income) grow.
