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5 Best Banking Stocks In Canada

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Why Choose a Canadian Bank Stock?

The Canadian banking system has some of the most durable, resilient, and well-run banks in the world.

They have weathered some of the worst turmoil in the Canadian economy over the past few decades, and while some were generally unfazed, the ones that were bounced back rather quickly.

Due to the banking system’s inherent interests in so many of the most important business sectors, investing in banks is a means of indirectly diversifying your investment exposure into far more industries than finance alone.

Investing in bank stocks is also a great idea for investors looking for higher stable dividend yields, and it should be no surprise this is why many bank stocks are considered blue chip stocks.

In today’s review, we will be looking at the best Canadian bank stocks investors should consider adding to their investment portfolios.

Disclaimer:

Equity investments are subject to market risks and may not be suitable for all investors. If you have any doubts as to the merits of an investment, you should seek advice from an independent financial advisor. So please invest at your own risk.

The Best Canadian Bank Stocks

Royal Bank of Canada (TSX: RY)

The Royal Bank of Canada is the largest Canadian bank by market capitalization.

It was founded in 1864 and has 158 years of operating history.

The company has been awarded Canada’s most valuable brand award six years in a row, and its stock proved remarkably resilient during times of major economic uncertainty.

The bank has about 90,000 employees and serves over 17 million customers from across the world.

The bank’s primary interests include personal banking, commercial banking, wealth management, insurance, capital markets, and investor and treasury services.

The Royal Bank of Canada has a market capitalization of $172 billion and had a CAD$49.69 billion fiscal revenue year in 2021.

The bank also clocked in a net income of CAD$16.05 billion for the same year.

The company has an 11-year dividend growth streak, a dividend yield of 3.91%, a forward dividend yield of 4.19%, and a dividend payout ratio of 43%.

The Royal Bank of Canada’s stock currently trades at CAD$127.32 (as of Nov 4th,2022).

 

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The Toronto Dominion Bank(TSE: TD)

The Toronto Dominion Bank, aka TD Bank, was created in 1955 after the merger of the Dominion bank and the Bank of Toronto.

TD Bank is the 2nd largest bank in Canada and the 5th largest bank in North America based on market capitalization.

The bank’s operations are centered around US retail, Canadian retail, and wholesale banking.

They specialize in retail banking, which makes up 90% of their earnings.

The bank also has interests in offering wealth management, insurance, commercial banking, and small-scale banking services.

The bank has over 85,000 employees.

The bank serves over 25 million customers across the world and commands over 15 million online users.

TD bank currently has a market capitalization of $159 billion and has about $1.8 trillion in assets.

They had a $38.28 billion fiscal revenue year in 2021 and a net income of $11.17 billion for the same year.

Over the past decade, the bank’s yearly revenue has consistently exceeded the $20 billion mark.

The company has a dividend yield of 4.06% and a Price to Earnings(P/E) ratio of 12.46.

TD bank’s stock currently trades at CAD$87.97 (as of Nov 4th,2022).

 

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Canadian Imperial Bank of Commerce(TSE: CM)

The Canadian Imperial Bank of Commerce was created in 1961 after the merger of the Imperial Bank of Canada and the Canadian Bank of Commerce.

It’s the smallest of the five major banks.

The bank’s operations are centered around

  • Canadian commercial banking
  • Small business and personal banking
  • US commercial banking and wealth management
  • Canadian commercial banking and wealth management.

Apart from having 11 million customers, the bank also caters to commercial, corporate, and institutional clients and small businesses.

The bank currently has about 45,000 employees.

The Canadian imperial bank has a market capitalization of $55 billion and has about CAD$837 billion in assets.

They had a $20 billion fiscal revenue year in 2021 and a net income of $6.45 billion for the same year.

The company has a dividend yield of 5.2%, a dividend payout ratio of $45.58, and a Price to Earnings(P/E) ratio of 8.85

The Canadian Imperial Bank of Commerce’s stock currently trades at CAD$18.38 (as of Nov 4th,2022).

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National Bank of Canada (TSE: NA)

The National Bank of Canada is the 6th largest commercial bank based in Toronto, Canada.

It’s also the largest bank in Quebec.

Quebec accounts for about 58% of National bank’s earnings.

The bank has international banking interests in Europe and the United States and serves 2.7 million customers.

The bank currently has over 26,000 employees.

The bank’s main businesses are focused in the following sectors:

  • Personal and commercial banking.
  • Wealth Management.
  • Financial Market.
  • US and International specialty finance

The National Bank has a market capitalization of $31 billion and has about CAD$355 billion in assets.

They had an $8.93 billion fiscal revenue year in 2021 and a net income of $3.20billion for the same year.

The company has a dividend yield of 3.71%, a dividend payout ratio of 34.6, and a Price to Earnings(P/E) ratio of 9.47.

The bank has the lowest forward dividend yield of the largest five banks at 5.41%.

The National Bank of Canada’s stock currently trades at CAD$93.81 (as of Nov 4th,2022).

Bank of Nova Scotia (TSE: BNS)

The Bank Of Nova Scotia was founded in March 1832 and is the 3rd largest bank in Canada by market capitalization.

The bank’s operations are centered around US retail, Canadian retail, and Wholesale banking.

It also offers services in select parts of Europe, Australia and Asia, and Latin America (Mexico being excluded).

The bank is categorized as a top three bank not only in Canada but also in Peru and Chile.

The bank has interests in corporate and investment banking, wealth management, insurance, commercial banking, and small-scale banking services.

The bank has about 90,000 employees.

The bank serves over 25 million customers across the world.

The bank’s main businesses are focused in the following sectors:

  • Canadian Banking
  • Global banking
  • International Banking
  • Global Wealth Management

The Bank of Nova Scotia currently has a market capitalization of $78.billion and has about $1.18 trillion in assets.

They had a $31.25 billion fiscal revenue year in 2021 and a net income of $9.96 billion for the same year.

The company has a dividend yield of 6.23% and a price-to-earnings (P/E) ratio of 7.92.

The Bank of Nova Scotia has the highest forward dividend yield of the largest five banks at 6.29%.

The Bank of Nova Scotia’s stock currently trades at CAD$65.85 (as of Nov 4th,2022).

Conclusion

The Canadian banking industry is somewhat of an oligopoly of major banks that quickly buy out their smaller competitors.

This might be a negative thing to some, but to others, it’s a positive thing in that it provides a degree of stability for these major banks.

This prevents them from disruption, which is a good thing for investors and shareholders.

Whether you are a beginner investor or experienced investor, you can never go wrong long-term with owning bank stocks in these major Canadian banks.