Top 3 bank stocks to buy in October 2021
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The S & P / TSX Composite Index rose 101 points on October 19. The Canadian financial space ended the day in the green. The International Monetary Fund (IMF) recently predicted that a slowing global recovery and high inflation would weigh on developed country markets. This should encourage Canadian investors to target bank stocks that offer good value. Indeed, the last batch of bank results should be published in late November and early December. Today I want to focus on three of my favorites in this space.
This banking action offers exposure to the giant of the American economy
Toronto-Dominion Bank (TSX: TD) (NYSE: TD) is the second largest financial institution in Canada. Meanwhile, this Canadian bank stock is also one of the largest retail banks in the United States. Its shares climbed 23% in 2021 to the October 19 close. The stock is up 49% year over year.
Like Canada, the United States has experienced a strong recovery, but still faces challenges due to labor shortages and inflationary pressures. Either way, TD Bank has generated strong earnings over the cumulative period. For the first nine months of 2021, the bank posted adjusted net income, or adjusted diluted earnings per share, of $ 10.7 billion, or $ 5.83. Its retail banking segments in Canada and the United States posted year-over-year net income growth of 68% and 92%, respectively.
This bank stock has a favorable price / earnings (P / E) ratio of 10. It offers a quarterly dividend of $ 0.79 per share, which represents a yield of 3.5%.
Here’s why I’m looking for BMO this month
Bank of Montreal (TSX: BMO) (NYSE: BMO) is another leading Canadian bank stock that enjoys strong exposure to the US economy. BMO stock has risen 38% so far this year. The title is up 64% compared to the same period in 2020.
The bank released its third quarter 2021 results on August 24. Adjusted net income increased 82% from a year ago to $ 2.92 billion. Additionally, adjusted earnings per share rose 86% to $ 3.44. In the first nine months of 2021, BMO posted growth in adjusted net income and adjusted EPS of 79% and 82%, respectively, to $ 6.42 billion, or $ 9.63. Like its peers, BMO saw its profits increase significantly as a result of a sharp decline in provisions for credit losses.
The shares of this bank stock last had a strong P / E ratio of 12. BMO pays a quarterly dividend of $ 1.06 per share, which represents a return of 3.1%.
One more bank action to seize in October
Canadian Imperial Bank of Commerce (TSX: CM) (NYSE: CM) is a bank stock that I had suggested investors target, as the general market downturn began in early 2020. The market downturn in February and March offered a fantastic low purchase opportunity in this space. This bank share fell below the $ 75 / share mark at the end of March 2020. It closed at $ 147.97 on October 19.
In the third quarter of 2021, CIBC reported 48% net income growth over the previous year. Meanwhile, total revenue increased 7% to $ 5.6 billion. Bank stock has a favorable P / E ratio of 11. It offers a quarterly dividend of $ 1.46 per share. This represents a yield of 3.9%.