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Many of us look at the TSX today and wonder if there are opportunities to be had. Where are the diamonds in the rough that we can invest in and that are destined for wealth?
While nothing is certain, Canadian banks are likely to rebound strongly, making you richer than you thought possible. In fact, now could be the best time to invest for a turnaround in 2024.
Why Canadian banks?
The Canadian “Big Six Banks” are quite different when it comes to banking institutions in the world. These banks enjoy an oligopoly, with limited competition when it comes to performance. There are high barriers to entry, resulting in safeguards for the Big Six against competition.
Additionally, these companies are known for their strong regulatory environment and conservative lending practices. This has not only resulted in stronger companies but also in fewer bankruptcies, even during economic crises.
In fact, there hasn't been a banking crisis in Canada since 1837! That's almost 200 years of overall stability, overcoming the Great Depression, stagflation, recessions and more.
Dividend Powers
Additionally, these companies offer dividends. So if you're worried about performance in the coming quarters, you can at least rest assured that you'll continue to receive dividends. In fact, banks also have a long history of not only paying them but increasing them, even in difficult times.
These banks now have decades, if not more than 100 years, of dividend payments. These dividend payments also typically offer high yields. Even with the recent decline in markets, Canadian bank stocks have offered attractive dividend yields for income-seeking investors. Therefore, when the stock recovers, you will receive many more dividends along with your returns.
But which are the best for those seeking wealth? Let's consider investing in Royal Bank of Canada (TSX:RY), Toronto-Dominion Bank (TSX:TD), and Bank of Nova Scotia (TSX:BNS).
Why these three?
When it comes to investing in Canadian banks, these three are the largest by market capitalization. That size translates into greater financial resources, resilience and greater acquisitions, as well as expansion opportunities. All three provide these things along with diversification across the board, from wealth and business management to insurance and capital markets.
Furthermore, RY, TD and BNS stocks report strong financial performance. They provide healthy profits, strong capital positions and efficient cost management. This has generated reliable dividend growth as well as returns.
Finally, when it comes to these three, each has their own strengths. RY Stock offers the largest arm of wealth management, and that is growing even further with the acquisition of HSBC Canada. TD stock holds a leading position in the US market for its growth potential after the recession. BNS stock also provides greater exposure to Latin and South American companies, which could provide high-growth opportunities.
RY stock is up 71% since bottoming with a dividend yield of 4.14% at the time of writing. TD stock offers a 5% dividend yield, and the stock is up 7% since bottoming. Meanwhile, BNS shares are up 19%, with a dividend yield of 6.6%. Overall, when it comes to getting rich in 2024, these companies are the best of the best.
