If you’re looking for a way to grow your wealth, you might want to consider adding some Canadian bank stocks to your portfolio. Besides steady dividends, bank stocks can offer strong returns and exposure to various segments of the economy. The robust business model and strong financial performance of these institutions also give them the ability to navigate temporary periods of economic uncertainty without compromising their long-term growth prospects.
In this article, I’ll highlight two of the top dividend-paying Canadian bank stocks you can buy today that can help you make a fortune in the long run.
Bank of Montréal stock
Based on its market cap of $92.3 billion, Bank of Montréal (TSX:BMO) is currently the third-largest bank in Canada. After rising 6.9% in 2023, it has slipped by 3.1% this year so far to trade at $127.03 per share. At this market price, BMO stock offers a decent 4.8% annualized dividend yield and distributes its dividend payouts every quarter.
One of the main reasons to buy BMO stock is its diversified business operations that allow it to perform well in any market condition. Besides Canada, the bank has a strong presence in the United States, giving it a balanced revenue mix and exposure to different growth opportunities.
In the fourth quarter of its fiscal year 2023 (ended October), Bank of Montréal reported an impressive 21.4% YoY (year-over-year) increase in its total revenue to $7.9 billion. Although its adjusted quarterly earnings of $2.81 per share fell 7.6% from a year ago due to increased provision for credit losses, its adjusted quarterly net profit of $2.15 billion exceeded Bay Street analysts’ expectations.
Another reason to invest in BMO stock is its outstanding dividend history. Notably, the Toronto-headquartered bank has been paying dividends to its shareholders for 195 years, making it the longest-running, dividend-paying business in Canada. It also has a solid track record of increasing its dividend payouts over time. In the last five years between its fiscal year 2018 and 2023, BMO’s annual dividends have risen by about 53%.
Canadian Western Bank stock
Canadian Western Bank (TSX:CWB) is another fundamentally strong Canadian bank stock you can consider owning for the long term. It currently has a market cap of $2.7 billion as its stock trades at $28.35 per share. After posting solid 28.3% gains last year, CWB stock has gone down by nearly 8% in 2024 so far. It has a 4.8% annualized dividend yield at the current market price.
Compared to most other large banks in Canada, the Canadian Western Bank has posted higher earnings growth in the last few quarters due largely to its consistent focus on disciplined risk management and secured lending approach. In the quarter ended in October 2023, CWB’s total revenue rose 3.2% YoY to about $289 million. More importantly, its adjusted quarterly earnings of $0.94 per share advanced by 6.8% from a year ago.
The bank’s management has been aiming to consistently improve financial growth in the long term with its balanced growth strategy, which includes expanding its presence in Ontario and Quebec while maintaining its leadership position in Western Canada. Considering that, I expect CWB stock to deliver strong returns in the long run.
