The Canadian stock market has started 2024 on a mixed note, as speculations about the Federal Reserve and the Bank of Canada’s upcoming policy moves continue. On the one hand, the possibility of interest rate cuts has the potential to drive stocks higher this year. On the other hand, if the central banks hold interest rates steady in the coming meetings, it may hurt investors’ sentiments and drive the market down again.
Stock market pullbacks can be scary for most stock market beginners, but they also present opportunities for investors who believe in Foolish investing philosophy by taking the long-term approach. One of the best places to find value during a market selloff is in large-cap stocks with strong fundamentals and competitive advantages. These stocks tend to be more resilient than smaller or riskier growth stocks and bounce back faster when the broader market recovers. Buying such big stocks at a bargain during a market selloff can help investors make big profits in the long run.
In this article, I’ll highlight two such big stocks you can consider adding to your portfolio if there is another market selloff in 2024.
Image source: Getty Images
TD Bank stock
Toronto-Dominion Bank (TSX:TD) is the first large-cap stock that you can consider buying if the market slides again in 2024. It’s currently the second-largest Canadian bank based on its market cap of $147 billion. After losing nearly 12% of its value in the previous two years, TD Bank stock has extended its losses in January so far due mainly to uncertainties surrounding interest rate cuts. With this, it currently trades at $81.48 per share and offers an attractive annualized dividend yield of 5%.
In its fiscal year 2023 (ended in October), TD Bank’s total revenue rose 12.3% YoY (year over year) to $51.8 billion with the help of volume growth and higher margins in its Canadian personal and commercial banking segment, reflecting its ability to continue growing even in tough economic times. Although challenging borrowing conditions have driven its provisions for credit losses higher in the last few quarters, TD’s consistent focus on delivering efficiencies and investing in new capabilities still brightens its long-term growth outlook.
Bank of Montreal stock
Bank of Montreal (TSX:BMO) could be another large-cap Canadian stock you may want to consider buying during a market selloff in 2024. It currently has a market cap of $92.4 billion as its stock trades at $127.25 per share after rising by 4.8% in the last six months. BMO has an annualized dividend yield of 4.7% at this market price.
Like TD Bank, BMO has strong fundamentals and competitive advantages in the personal banking segment, making it more resilient during market downturns. In its fiscal year ended in October 2023, Bank of Montreal’s total revenue climbed up by 7.2% YoY to $28.4 billion. While its adjusted annual earnings of $8.7 billion reflected a nearly 2% YoY decline, it was higher than Street analysts’ expectations of $8.5 billion.
Moreover, the Bank of Montreal’s robust balance sheet makes it even more appealing to conservative investors with low-risk appetite. Given its strong track record of yielding attractive shareholder returns, buying BMO stock on the dip in 2024 could be a wise move for investors looking for a stable investment with growth potential and reliable dividend payments.
