TD & BNS: 2 TSX bank stocks to buy with jumbo interest hike expected

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TD & BNS: 2 TSX bank stocks to buy with jumbo interest hike expected

TD & BNS: 2 TSX bank stocks to buy with jumbo interest hike expected
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Highlights

  • The financial sector accounts for almost 32 per cent of the TSX Composite Index
  • Toronto-Dominion Bank is ranked second and the Bank of Nova Scotia is ranked third in the S&P/TSX Capped Financial Index
  • TD and BNS both come with dividends

Six of Canada’s biggest lenders are in agreement that the Bank of Canada can be expected to raise its interest rate by 50 basis points, reports indicate. If this happens, it would be the first 50-basis-points hike in 22 years. 

This may also boost the ability of the big lenders to earn interest revenue. In lieu of this, let’s explore two TSX financial stocks.  

At present, the S&P/TSX Capped Financial Index is up 1.8 per cent year-to-date (YTD) and going by market capitalization, Toronto-Dominion Bank is ranked second in it and the Bank of Nova Scotia is ranked third. 

Toronto-Dominion Bank (TSX:TD)

The Toronto-Dominion Bank has a market cap of C$180 billion, and by this measure, the Royal Bank of Canada is the only other bank in its league. It has significant operations in the US. 

The TD stock closed at C$100.19 Tuesday, April 5. It seems to be on an upward trajectory over the past year, having gained 20 per cent in 12 months, 17 per cent in the last six months, 1.7 per cent in the last 30 days and 3.3 per cent year-to-date. 

TD’s return-on-equity is 15.62 per cent, its quarterly dividend is C$0.89 and its dividend yield is 3.553 per cent. 

Also read: Couche-Tard (ATD) & Metro (MRU): 2 TSX consumer stocks to eye in April

Bank of Nova Scotia (TSX:BNS)

The Bank of Nova Scotia is a global bank and also provides wealth management services. Its market cap is C$107 billion.  

The BNS stock closed at C$89.22 Tuesday and is in the red YTD, down 0.4 per cent. It gained nearly 14 per cent in the last year. 

Its return-on-equity is similar to TD’s, 15.03 per cent and its quarterly dividend is C$1 with a dividend yield of 4.483 per cent.

TD & BNS: 2 TSX bank stocks to buy with jumbo interest hike expected 

Image source: © 2022 Kalkine Media® 

Also read: Canada budget 2022: What to expect & what are the big questions? 

Bottom line

Both the above stocks saw their 52-week lows in September 2021 and their 52-week highs in February. The financial sector accounts for almost 32 per cent of the TSX Composite Index. These two companies feature in the top five of Canada’s benchmark index, going by market cap.  

However, before buying any stock in-depth research into their performances, key fundamentals, upcoming planned strategies and a general understanding of the sector is merited. TD and BNS come with dividends that may provide passive income.

Also read: Wecommerce (WE) & Quisitive (QUIS): Are these 2 TSXV tech stocks a buy? 

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.

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