My Top 3 Bank Stocks to Buy After Earnings

Royal Bank of Canada (TSX:RY)(NYSE:RY) and other top Canadian bank stocks still look strong after Q3 earnings.

| More on:

Canada’s top banks have released their third-quarter 2021 earnings at the end of this month. The broader economic rebound has continued to give a boost to the country’s top financial institutions. Today, I want to go over my top three bank stocks to buy and hold after the third-quarter earnings season. Let’s dive in.

Canada’s top bank stock lived up to the billing in its earnings release

Royal Bank of Canada (TSX:RY)(NYSE:RY) is the largest bank stock on the TSX by market cap. This is a stock I’d suggested investors target from the beginning of the year. Shares of Royal Bank have climbed 26% in 2021 as of close on August 26. The top bank stock is up 30% year over year.

Investors got to see Royal Bank’s third-quarter 2021 results on August 25. Net income increased 34% year-over-year to $4.29 billion or 35% to $2.97 diluted earnings per share. Profit in its Personal & Commercial Banking segment delivered 55% growth to $2.11 billion. It was a banner quarter for Royal Bank in its Wealth Management and Capital Markets division as well. Like its peers, Royal Bank benefited from significantly lower provisions for loan losses.

This bank stock possesses a price-to-earnings ratio of 13, putting it in solid value territory. It declared a quarterly dividend of $1.08 per share. That represents a 3.2% yield.

Scotiabank is worth buying on its post-earnings dip

Scotiabank (TSX:BNS)(NYSE:BNS) is a Canadian bank stock that boasts a significant global footprint, especially in Latin America. This bank stock has climbed 17% in the year-to-date period. Meanwhile, its shares have increased 38% from the same time in 2020.

Canada’s International Bank unveiled its Q3 2021 earnings on August 24. Scotiabank delivered a third-quarter profit of $2.54 billion or $1.99 per diluted share – up from $1.30 billion or $1.04 per diluted share in the prior year. The bank reported provisions for credit losses of $380 million – down significantly from $2.18 billion in the third quarter of 2020. These results managed to beat analyst expectations.

This bank stock last had a P/E ratio of 11, putting Scotiabank in attractive value territory. It announced a quarterly dividend of $0.90 per share, representing a solid 4.5% yield.

One more bank stock to snatch up after earnings

Bank of Montreal (TSX:BMO)(NYSE:BMO) is another bank stock I’d suggested that investors target as the economy was on the rebound in the spring. Shares of BMO have increased 33% so far this year. Meanwhile, the stock is up over 50% in the year-over-year period.

The bank released its Q3 2021 results on August 24. In this instance, BMO’s monster revenues fueled its earnings growth. Revenue was reported at $7.56 billion – up from $6.07 billion in the previous year. Adjusted net income climbed 82% year-over-year to $2.92 billion and adjusted earnings per share jumped 86% to $3.44. The bank’s The US Personal & Commercial Banking segment delivered a profit gain of $286 million from the prior year.

BMO possesses a P/E ratio of 11, putting the bank stock in favourable value territory. It offers a quarterly distribution of $1.06 per share, which represents a 3.3% yield.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Ambrose O'Callaghan has no position in any stocks mentioned. The Motley Fool recommends BANK OF NOVA SCOTIA.

More on Investing

coins jump into piggy bank
Retirement

Here’s the Average RRSP Balance at Age 44 for Canadians

Holding stocks like Alimentation Couche-Tard (TSX:ATD) in an RRSP is a good way to build your wealth.

Read more »

dividends can compound over time
Dividend Stocks

Want a 7% Yield? The 3 TSX Stocks to Buy Today

These TSX stocks are offering high yields of over 7%, making them attractive for investors seeking steady passive income.

Read more »

construction workers talk on the job site
Energy Stocks

Best Stock to Buy Right Now: Baytex vs Suncor?

Suncor and Baytex stocks both look like solid companies offering growth and dividends. But which is the better buy?

Read more »

how to save money
Dividend Stocks

The Smartest Dividend Stocks to Buy With $200 Right Now

These smartest dividend stocks can consistently pay and increase their dividends in the coming years, irrespective of the macro uncertainty.

Read more »

bulb idea thinking
Energy Stocks

3 Incredibly Cheap Energy Stocks to Buy Now

Energy stocks are trending upwards on the back of several key factors. And these three continue to be top cheap…

Read more »

Pumpjack in Alberta Canada
Energy Stocks

Should You Buy Freehold Royalties Stock for its 8% Yield?

Freehold Royalties is a TSX dividend stock that offers shareholders a forward yield of 8%. But is the energy stock…

Read more »

Electricity transmission towers with orange glowing wires against night sky
Dividend Stocks

3 Utility Stocks That Are Smart Buys for Canadians in November

These utility stocks benefit from regulated businesses and generate predictable cash flows that support higher dividend payouts.

Read more »

A worker uses a double monitor computer screen in an office.
Investing

Is BCE Stock a Buy for its 9.9% Dividend Yield?

BCE stock just dropped another 10%. Is it now oversold?

Read more »