The 2008 recession was triggered by mortgage-backed securities. Canadian banks resisted and were applauded around the world for their displayed fiscal responsibility during this period.
This time the bull market ended with falling oil prices and a deadly pandemic. As a Canadian investor, it is time to find stock options that have gone through such difficult financial times and can potentially become winners.
Banks are often the hardest hit by recessions. however, bank stocks may also experience significant long-term recovery and growth.
I’m going to look at two battle-hardened bank stocks that have held up for over 100 years.
The leader of the Big Five
Royal Bank of Canada (TSX: RY) (NYSE: RY) is the leader of the five major Canadian banks. It represents a market capitalization of more than $ 110 billion and offers its services in almost all financial sectors. Whether it’s personal or commercial banking, wealth management, treasury, insurance or financial markets, you’ll find RBC’s footprint.
Royal Bank of Canada has been paying dividends to its investors for over 130 years. This sequence of payments in itself demonstrates the reliability of RBC’s actions. During the 2008 recession, as many banks in North America collapsed, RBC escaped all major setbacks and recovered from the crash in less than a year.
RBC’s strict and conservative policies are believed to have prevented it from entering the subprime movement and that it ultimately helped the bank avoid the worst of the stock market crash. These time-tested conservative practices can help the bank during this stock market crash.
So far, RBC stock has been very volatile. It has experienced many spikes in the past month or so. Since the first day of the stock market crash, its price has dropped significantly. Experts believe that RBC’s stable and well-capitalized operations and a proactive approach by the Canadian government to prevent a recession will help the stock gain some stability.
One of the oldest banks
Bank of Montreal (TSX: BMO) (NYSE: BMO) is one of the oldest banks in the world. Established as the Bank of Montreal 202 years ago, it is another bank dividend aristocrat who has a reputation for paying his investors. It is currently paying a dividend yield north of 6%.
BMO is one of the hardest hit of the Big Five due to much of its oil and gas related loans. As a result of the stock market crash, BMO is one of those TSX stocks that lost almost half of its value.
However, the bank has already gone through difficult times and has established itself as a winner. This time too, BMO stocks can regain their value thanks to the bank’s promising restructuring efforts and the strong wealth management division. Activities in the United States and its gradual expansion could also help restore BMO’s stocks.
We could bet on bank stocks
RBC and BMO stocks are two of the options proven on the TSX and have experienced successive market collapses for a century. If you can’t decide where to put your money in these difficult times, consider investing in these dividend aristocrats.
Crazy contributor Christopher Liew has no position in any of the titles mentioned.