Easy Investing: 2 Canadian Bank Stocks With Nice Dividends and a Reasonable Price

TD Bank (TSX:TD) and another Canadian bank stock that appears to offer a great value for money going into August 2023.

| More on:
stock research, analyze data

Image source: Getty Images

New investors don’t need to overcomplicate things when it comes to getting into the market waters for the first time. Undoubtedly, market volatility and correction calls by various pundits can make investing seem like a scary game. Though there may be sector- or theme-focused bubbles brewing in markets at any given time, I’d argue that by keeping it simple and sticking within one’s circle of competence, one can steer clear of trouble, even in a market that’s bracing itself for a recession or something of the sort.

In this piece, we’ll have a closer look at two Canadian bank stocks that I think have become so unloved that they may offer some of the best risk/reward tradeoffs in the market right now. Indeed, bank stocks may not skyrocket in the same way that many artificial intelligence stocks did earlier this year. However, they do have nice, slightly swollen dividend yields, and the valuations aren’t all too bad at this juncture.

Of course, a recession can always bring forth more downside risk than expected. But after a rocky quarter for Canada’s top banks, I think a lot of the bank sector fears are already well known by many at this point.

Whenever there’s nothing but risk on the radar of others, you may have an opportunity, as a contrarian, to get a bit more for your invested buck!

Without further ado, let’s look at two bank stocks that could make for intriguing pickups, whether you’re a beginner investor looking to tame a choppy TSX or a seasoned investor who’s just looking for a decent value for money.

Canadian bank stock #1: CIBC

First up, we have CIBC (TSX:CM), an underrated bank that has a fairly sizeable amount of exposure to Canada’s hot housing market. With rates continuing to rise, there’s some worry that the Canadian housing market could begin to feel a bit of the heat.

Regardless, such domestic housing risks, I believe, have factored its way into the valuation of CIBC shares a long time ago. When it comes to stocks, you must consider what most others aren’t at any given instance. As the Bank of Canada nears peak rates, there’s a good chance that the rate jitters may be a tad overblown.

Sure, provisions and earnings-eroding headwinds are to be expected in a recession. And though the housing market may show its fickle side, I simply don’t see a catastrophic housing market crash. In any case, CIBC stock is down over 31% from its all-time high hit earlier last year.

With a 6.14% dividend yield and a modest 11 times trailing price-to-earnings multiple, I view the stock as sporting a nice margin of safety if Canada’s coming recession isn’t all too rocky.

Canadian bank stock #2: TD Bank

TD Bank (TSX:TD) is a Canadian bank with a growing presence south of the border. It’s been a rough ride for shares of TD Bank this year, thanks in part to the U.S. regional banking blow-up, which, more or less, appears to have settled in recent months.

Indeed, this year’s big story was TD’s bold move to walk away from the acquisition of First Horizons Bank amid the chaos and volatility down south. As a result, TD is likely a bit too well capitalized. It’s far better to be overcapitalized than undercapitalized, though.

In due time, I think TD will return to the U.S. regional acquisition track. Until then, TD stock is down and out, offering new investors a nice dividend (4.6%) at a cheap price of admission (10.6 times trailing price to earnings)!

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 Joey Frenette has positions in Toronto-Dominion Bank. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

More on Bank Stocks

Man data analyze
Bank Stocks

Is TD Bank Stock a Buy, Sell, or Hold for 2025?

TD stock has underperformed its large Canadian peers this year. Will 2025 be different?

Read more »

dividends can compound over time
Bank Stocks

Is TD Bank Stock a Buy for Its 5.2% Dividend Yield?

TD Bank stock offers a rare 5.2% dividend yield—can it rebound from challenges and reward contrarian investors? Here's what to…

Read more »

analyze data
Bank Stocks

Is BMO Stock a Buy for its 4.7% Dividend Yield?

Bank of Montreal is up 20% since late August. Are more gains on the way?

Read more »

calculate and analyze stock
Bank Stocks

4% Dividend Yield? I Keep Buying This Dividend Stock in Bulk!

If you find the perfect dividend stock, you never have to worry about investing again. And that's what you get…

Read more »

Investor reading the newspaper
Bank Stocks

Is Canadian Imperial Bank of Commerce Stock a Good Buy?

Let's dive into whether Canadian Imperial Bank of Commerce (TSX:CM) is a top buy, sell, or hold right now.

Read more »

Man data analyze
Bank Stocks

Where Will BNS Stock Be in 3 Years?

Bank of Nova Scotia is primed for growth with a bold U.S. expansion, steady dividends, and a value focus that…

Read more »

Blocks conceptualizing Canada's Tax Free Savings Account
Stocks for Beginners

TFSA 101: Earn $1,596.60 per Year Tax-Free!

Investors don't have to buy some risky stock if they want tax-free high income. Instead, buy this top stock instead.

Read more »

data analyze research
Bank Stocks

TD Bank: Buy, Hold, or Sell Now?

TD is underperforming its large Canadian peers this year. Is a rebound on the way?

Read more »