Canadian bank stocks are starting to see a recovery as interest rates stabilize and the economy shows signs of resilience. This shift is helping banks recover from recent pressure, making it a good time to revisit these stocks, especially ones like Canadian Imperial Bank of Commerce (TSX:CM) and Bank of Montreal (TSX:BMO). Both deserve attention because of strong dividend yields and solid market positions, especially as these continue to expand business offerings. With this bounce-back, these two banks might just offer the right mix of growth and income for savvy investors.
CIBC
If you're on the lookout for a stock that's making waves, CIBC might just deserve a spot on your radar. The bank recently announced its plan to buy back up to 20 million common shares, or about 2.1% of its outstanding shares, as part of a normal course issuer bid. This move not only shows confidence in its financial health. It also aims to enhance shareholder value by effectively managing capital.
Plus, CIBC's third-quarter financial results were nothing short of impressive. It reported a 13% increase in revenue year over year, reaching $6.6 billion. And a whopping 25% jump in reported net income. Adjusted net income rose by 28%, and adjusted diluted earnings per share (EPS) climbed by 27% compared to the same quarter last year. With a strong common equity tier-one (CET1) ratio of 13.3%, it's showcasing solid financial stability.
Combine all that with a generous dividend yield and a proactive approach to growth, and you've got a compelling case for giving CIBC stock some serious consideration. Its commitment to returning value to shareholders, along with robust financial performance, makes it a noteworthy player in the banking sector. So, if you're thinking about diversifying your portfolio, CIBC might just be worth a closer look!
BMO
BMO stock is also a stock that deserves attention, especially after its solid third-quarter results for 2024. The bank reported a net income of $1.865 billion, a significant improvement compared to the same period last year. Adjusted net income stood at $1.981 billion, and EPS climbed to $2.64 on an adjusted basis. These results highlight BMO's ability to manage its operations efficiently despite a cyclical rise in credit losses. This saw provisions for credit losses increase to $906 million.
One of the key reasons to consider BMO stock is its robust capital position. With a CET1 ratio of 13%, BMO maintains a solid balance sheet. This provides the bank with the flexibility to continue delivering shareholder value through dividends and potential growth initiatives. In fact, BMO has declared a fourth-quarter dividend of $1.55 per common share, marking a 5% increase from last year!
BMO's diversified businesses, including strong performance in Canadian Personal and Commercial Banking and a solid U.S. segment, are driving consistent earnings growth. With an impressive track record of delivering sustainable returns and being recognized for corporate responsibility, BMO offers both stability and long-term growth potential for investors. So, if you're looking to add a reliable bank stock to your portfolio, BMO is definitely worth a closer look!
Foolish takeaway
When comparing CIBC and BMO on the TSX today, both offer strong value, but BMO might have a slight edge. BMO's third-quarter results show solid earnings growth and a higher CET1 ratio, indicating strong financial stability, while its dividend yield of around 5% is competitive. CIBC, however, has a strong dividend as well, but BMO's diversified operations and focus on growth across both Canadian and U.S. markets give it a favourable outlook. For those seeking a mix of value, reliable dividends, and growth potential, BMO could be the better buy right now.