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As the Canadian economy shifts into recovery gear, banks stocks have been rebounding smoothly, indicating investors’ renewed optimism. Toronto-Dominion Bank (TSX:TD) and Bank of Nova Scotia (TSX:BNS), two of the six big banks, have posted excellent growth, each returning over 45 per cent in the span of one year. Both the lender stocks are also among the top market movers on the TSX, recording high trading volume on Monday, March 29.
So, what’s propelling the high level of activity in these two bluechip bank stocks?
Toronto-Dominion Bank (TSX:TD)
Stocks of TD Bank have been moving north in 2021. The scrips have returned 14 per cent year-to-date (YTD).
In an effort to expand its electronic fixed income trading business, the lender recently announced acquisition plans of Headlands Tech Global Markets, LLC. The move has further contributed to TD’s growth.
The stocks closed at C$82.46 during market close on March 26, down 1.4 per cent from its 52-week high of C$83.65, leaving enough room for investors to make an entry before the prices rise again.
The stock has also outperformed the S&P TSX Diversified Banks Index, which rose by miniscule 0.2 per cent YTD.
The bank pays C$ 0.79 quarterly yield per stock and holds gross dividend yield of 3.83 per cent. The earnings per share is C$ 6.58.
On the earnings front, TD reported net income of C$ 3.37 billion in the first quarter of 2021, up 10 per cent year-over-year.
@Kalkine Media 2021
Bank of Nova Scotia (TSX:BNS)
Scotiabank has also seen tremendous growth in the last 12 months, rebounding over 46 per cent its pandemic-led nosedive in the last one year.
The scrips are up 15 per cent YTD and are hovering near its 52-week high. The stock closed at C$ 79.37 on Monday. The gross dividend yield is 4.54 per cent.
Stocks of the C$ 96-billion lender holds a price to earnings ratio of 14.6 and price to cash flow ratio 2.1.
The bank posted a net income of C$ 2.39 billion in Q1 FY21, a marginal growth from C$ 2.36 billion a year ago. The stocks’ return on equity is over 10 per cent.
As the economy revives, bank stocks will be on the growth path and may even hike dividends, making them an attractive buy.
The above constitutes a preliminary view and any interest in stocks should be evaluated further from an investment point of view.
