Four bank stocks to deposit investment capital

These financial picks provide diversification and healthy dividends, but make sure the price is right before buying, Morningstar analyst says.

Vikram Barhat 10 November, 2015 | 6:00PM

Economic uncertainty, oil price rout and a weak loonie notwithstanding, leading Canadian banks have posted strong profit growth in the third quarter. Similarly, banks south of the border have reported a healthy quarterly profit shored up by an uptick in job growth, consumer spending and lending activity.

After bouncing back from the 2008 financial crisis, bank stocks have continued to provide high returns in the lower-risk and highly regulated financial markets on both sides of the border. Further, North American banks have become increasingly diversified both in terms of their geographic footprint and products and services. This has afforded banks new opportunities and market shares that have helped outweigh any slowdown in one market and stay profitable, reflected by healthy dividend payouts.

There is the perception that the banks, especially those in Canada, are significantly exposed to the nation’s ailing energy sector and a dangerously frothy housing market. However, Morningstar analyst Dan Werner says Canadian banks have a limited exposure to the energy sector, and that there are no identifiable catalysts in sight that would have a negative impact upon the housing sector.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
Bank of Montreal77.65 CAD-0.50
Capital One Financial Corp68.13 USD-2.62
Royal Bank of Canada93.63 CAD-0.73
The Toronto-Dominion Bank60.17 CAD-1.23

About Author

Vikram Barhat

Vikram Barhat  Vikram Barhat is a freelance writer.

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