5 TSX financial stocks to watch amid rising mortgage costs

Presently, the market is experiencing volatility and is going through fluctuations. There is consistent economic pressure that is taking the stocks in different directions. Inflation and rising interest rates are subtly overpowering the market. According to Statistics Canada, the cost of mortgage interest in the country climbed in October by the most in more than three decades.

Meanwhile, the inflation rate has increased in Canada since the start of 2022 but held steady in October 2022 and was reported at 6.9 per cent. 

The S&P/TSX Capped Financial Index fell by 9.263 per cent YTD (year-to-date). But with a market rebound, the sector jumped by 6.313 per cent QTD (quarter-to-date).

As an investor, you can try to overcome the fluctuating stocks in your portfolio. For this, go with the stocks that protect you from the risk on your overall structure. In addition, assess the growth potential of every stock you choose. The market is dynamic, and different factors become dominant in different periods. Keep on updating your portfolio as per the current market trends. Let us look at the five stocks to assess their financial performances:

1. Toronto-Dominion Bank (The) (TSX: TD)

Toronto-Dominion Bank is a Canadian Bank that operates with an employee strength of 89,464. Further, the bank is engaged in wholesale and Canadian and US retail banking.  

In Q3 2022, the bank’s total revenue was reported at C$ 10,925 million versus C$ 10,712 million in the same quarter of the previous year. The adjusted net income grew to C$ 3,813 million from C$ 3,628 million for the same comparative period. The dividend per share grew to C$ 0.89 from C$ 0.79. Further, the dividend yield increased to four per cent from 3.7 per cent. The Bank’s EPS is C$ 7.91. The five-year dividend growth was noted at 7.47 per cent.

2. Royal Bank of Canada (TSX: RY)

Royal Bank of Canada is a Canadian bank with diversified financial services having integrated financial services. It offers personal and commercial services, services-capital market, wealth management, and insurance. 

In Q3 2022, Royal Bank’s net income was reported with a decline of 17 per cent at C$ 3,577 million compared to Q3 2021. Further, the diluted EPS too fell by 15 per cent and was reported at C$ 2.51. The Return on Equity (ROE) decreased by 500 bps and was noted at 14.6 per cent.  

On October 17, 2022, Royal Bank entered into an MoU (Memorandum of Understanding) with CACEIS to acquire RBC Investor Services’ European asset activities and Malaysian centre of excellence.

On October 4, 2022, the bank acquired MDBilling.ca. Meanwhile, in September, the bank acquired Brewin Dolphin Holdings PLC.

3. Bank of Montreal (TSX: BMO)

Bank of Montreal offers its services in North America and operates in four segments: capital market and wealth management, Personal and commercial banking, and U.S. P&C banking.

In Q3 2022, the bank’s revenue was C$ 6,099 million and the adjusted net income declined to C$ 2,132 million from C$ 2,292 million for the same comparative period.

The dividend of the bank is C$ 1.39 per share quarterly. The dividend growth for the past five years was noted at 6.77 per cent with a dividend yield of 4.22 per cent. The EPS is C$ 16.79 with a P/E (price-to-earnings) ratio of 7.9.

The total market capitalization of TD, RY, BMO, NA, and BNS:

4. National Bank of Canada (TSX: NA)

The National Bank of Canada stands in the sixth position in Canada. It offers integrated financial services and operational segments-commercial banking and financial markets.

In Q3 2022, National Bank’s net income declined to C$ 826 million from C$ 839 million in Q3 2021. The total revenue rose to C$ 2,413 million from C$ 2,254 million for the same comparative period. The bank’s total assets soared to C$ 387,051 million from C$ 355,795 million. With a quarterly dividend of C$ 0.92 per share, the bank reported a dividend yield of 3.824 per cent. The EPS is C$ 9.86.

5. Bank of Nova Scotia (TSX: BNS)

Bank of Nova Scotia is a financial services provider operating at a global level and offers a range of advice as well. The bank operates in business segments like wealth management and commercial and private banking.

In Q3 2022, Bank of Nova Scotia’s revenue rose to C$ 7,799 million from C$ 7,757 million in the year-ago quarter. The net income also increased to C$ 2,594 million from C$ 2,542 million. The diluted EPS rose to C$ 2.09 from C$ 1.99 million. With a dividend yield of 5.988 per cent, the bank distributes its dividend at C$ 1.03. The three-year dividend growth is noted at 2.45. per cent.  

Bottom Line

The financial sector has a wide range and is going through fluctuations daily. Analyze the stocks before adding them to your portfolio. Moreover, conduct thorough background research on your stocks as well as the companies. Assessing the company's financials is crucial to deciding your portfolio's overall structure.

Work with a long-term approach and complement it with the aspect of diversification. Putting these factors in place may help you to meet your investment goals effectively. 

Please note, the above content constitutes a very preliminary observation based on the industry and is of limited scope without any in-depth fundamental valuation or technical analysis. Any interest in stocks or sectors should be thoroughly evaluated taking into consideration the associated risks.