2 Top Bank Stocks to Buy Hand Over Fist in 2024 (2024)

Most large Canadian bank stocks have underperformed the broader market by a big margin in the last two years. While it’s true that high interest rates have driven banks’ net interest income up in recent quarters, we shouldn’t forget that the challenging economic environment has also increased their provisions for credit losses, affecting their profits. This is one of the key factors hurting bank investors’ sentiments of late.

Nonetheless, as inflationary pressures gradually cool down, central banks in the United States and Canada are expected to start easing their monetary stance sometime in 2024, which could lead to a spectacular recovery in bank stocks. If you want to benefit from this potential rally, it could be the right time to add some of the top bank stocks to your portfolio.

In this article, I’ll highlight two really attractive Canadian bank stocks you can buy in 2024. While these two stocks may not be among the three largest bank stocks in Canada, they have the ability to outshine their peers in terms of earnings growth, dividend stability, and future growth prospects.

National Bank stock

While the shares of most large banks trended downward last year, National Bank of Canada (TSX:NA) inched up by nearly 11%. Similarly, it continues to be the top-performing Canadian bank stock in 2024 with its 9.1% year-to-date gains. With this, NA stock is now at $110.17 per share and has a market cap of $37.4 billion.

National Bank’s total revenue in the quarter ended in January 2024 rose 4% from a year ago to $2.8 billion with the help of positive growth across all business segments. Although its provisions for credit losses and non-interest expenses increased last quarter, the bank managed to post a decent 1.2% YoY (year-over-year) increase in its adjusted quarterly earnings to $2.59 per share, beating Bay Street’s estimates of $2.36 per share.

Overall, National Bank’s diversified business mix, strong execution, and consistent focus on strategic capital deployment make it a reliable bank stock to hold for the long run. Besides its strong financial growth trends, despite adverse market conditions, the National Bank’s stable dividends make its stock even more attractive. Notably, it offers a decent 3.9% annualized dividend yield at the current market price and distributes its dividend payouts every quarter.

Canadian Western Bank stock

After rallying by more than 28% in 2023, shares of Canadian Western Bank (TSX:CWB) are going through a downside correction in 2024. CWB stock has lost nearly 9% of its value year to date, currently trading at $28.17 per share with a market cap of $ 2.7 billion. At this market price, the stock has an attractive dividend yield of 4.8% on an annualized basis.

While Canadian Western’s revenue in the first quarter of its fiscal year 2024 (ended in January) climbed by 6.3% YoY to $290 million, higher provision for credit losses as a percentage of average loans affected its bottom line. As a result, the bank reported an 8.8% YoY decline in its adjusted quarterly earnings to $0.93 per share, missing analysts’ expectations of $0.91 per share by a narrow margin.

Nonetheless, CWB’s diverse revenue streams, effective cost management strategies, and robust credit profile make this dividend-paying stock really attractive to buy on the dip right now and hold for years.