Do you have $5,000 you want to invest in the markets?
If so, TSX financial stocks are among the best assets you can buy. Over the years, TSX financials have delivered good returns, and while the future is never clear, these companies still have the characteristics that made them top performers in years gone by. These include conservative lending standards, high capital ratios, and strong competitive positions.
TSX financials have been among the nation’s best-performing equities for a reason. They are very much worth betting on. In the ensuing paragraphs, I’ll share the three TSX financials I’d buy if I were just starting out with $5,000 today. As luck would have it, these three are stocks that I in fact own – one of which I have not shared very frequently on the Motley Fool.
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Brookfield
Brookfield Corp (TSX: BN) is a diversified financial conglomerate. It is most active in asset management, renewable energy, infrastructure, and insurance. Its insurance business has become a progressively bigger part of the whole over the years. Recently Brookfield management said that the company might sell most of its other assets to the insurance business, forming a Berkshire Hathaway-like entity in the process.
Brookfield Corp’s main claim to fame is its discount to its sum of the parts (SOTP) valuation. The market value of its assets less the book value of its debt is considerably less than the company’s own market cap, which may indicate undervaluation. Whether SOTP is a valid approach to valuation is debatable – it ignores the layering of taxes to the corporate level – but at any rate, Brookfield’s distributable earnings are growing and its businesses are doing many high profile deals. It’s definitely worth a look.
TD Bank
The Toronto-Dominion Bank (TSX: TD) is the longest-standing stock in my portfolio. I’ve held it on and off for over six years. I exited TD stock at one point last year, but I started buying it back again after it dipped to $74. What caused the stock to dip to $74 was it took a huge fine and asset cap as a result of money laundering violations in the United States. The fine definitely depressed last year’s earnings but the asset cap may have been a blessing in disguise, as it loosened up funds that TD used to fund a massive buyback program. With TD trading at about 11 times earnings – cheaper than most large North American banks – that buyback money is probably being well spent.
Postal Savings Bank
Postal Savings Bank of China (OTC: PSTV.Y) is a Chinese bank stock I’ve owned for a few years now. It is one of the only big Chinese banks that does not have much exposure to China’s ailing commercial property sector (only 3% of its loans are to that sector). PSTV.Y is truly dirt cheap, trading at 5.6 times earnings and 0.54 times book value. It also has a very high dividend yield and a low payout ratio – a mouth-watering combination for a dividend stock. I’m quite happy holding Postal Savings Bank stock, and I’d consider it for investment if I were just starting off today with $5,000.
