2 Dividend-Paying Canadian Bank Stocks To Buy

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Summary

  • Economic recovery will likely boost the prospects of bank stocks
  • Bank stocks will likely deliver stellar returns in 2021
  • Canadian banks have managed to regain shareholder confidence

The ongoing COVID-19 pandemic had massive impact on the Canadian economy. However, this year the economy will likely expand and be resilient, forecasted the Bank of Canada. Market experts believe that the vaccine rollout and businesses returning to normal operations will increase demand and drive growth.

Economic recovery will boost the prospects of bank stocks as top Canadian banks managed to maintain strong balance sheets in their latest quarters. The financial institutions in Canada have proven stable and secure, despite the challenges posed by the pandemic, and they managed to regain shareholder confidence.

Here are two bank stocks that may deliver good returns in 2021:

 

Royal Bank of Canada (TSX: RY)

 

The Royal Bank of Canada (RBC), the largest bank in Canada, with over 17 million clients offers personal and commercial banking. It has operations in Canada and 36 other countries. Apart from the banking services, the RBC also provides other facilities like wealth management, capital markets and insurance services.

The stocks grew 30 per cent in a year and are up over 11 per cent year-to-date (YTD). The RBC also offers quarterly dividends of C$ 1.08 and currently yields 3.7 per cent.

Royal Bank of Canada’s one-year stock performance chart (Source: Refinitiv)

The bank has a market cap of over C$ 165 billion and offers a 14.3 per cent return on equity.

Last month, the RBC released financial reports for the first quarter ended January 31, 2020. The bank achieved a net income of C$ 3.8 billion, up by 10 per cent from the prior year. It also showed strong diluted Earnings per share (EPS) growth of 11 per cent.

 

Bank of Montreal (TSX: BMO)

 

Among one of the big five banks in Canada, the Bank of Montreal (BMO) offers diversified financial services to its customers across North America. It has more than 900 branches and serves at least seven million customers.

The bank's stock grew over 80 per cent in a year and 15 per cent YTD. The economic bounce back is likely to further boost the bank's stock.

Bank of Montreal’s one-year stock performance chart (Source: Refinitiv)

It offers quarterly dividends of C$ 1.06 and currently yields 3.8 per cent. The bank has a market cap of over C$ 71 billion and offers a 10.6 per cent return on equity.

In February 2021, BMO released financial reports for the first quarter ended January 31, 2020. The bank achieved a net income of C$ 2 billion in Q1 2021, an increase of 27 per cent from Q1 2020. The EPS was at C$ 3.03, an increase of 28 per cent.

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