Top 3 TSX Bank Stocks To Watch This Earnings Season

Earnings season for major Canadian banks is almost upon us. So, should investors who are building positions in our largest financial institutions load up the stock before the big event? Let’s look at some of the pros and cons of three large TSX banking stocks that reported gains around the end of the month.

Weighing three major Canadian banking stocks

Canadians interested in US growth, no doubt, already own shares of TD Bank (TSX: TD) (NYSE: TD). The nation’s number two bank has seen big gains in American markets. This name is so solid that, despite the volatility of the US elections, TD Bank has risen 11% in the past four weeks. Investors are also looking forward to TD Bank’s most recent quarter, with this senior banker up + 5% over the past five trading days.

A 4.7% dividend with a 59% payout ratio combines a rich yield with the potential for income growth over the years. Value may be better for TD Bank, although with a P / B ratio of 1.4 times the book, the long-term security offered appears to be worth the premium for this TSX bank stock.

BMO it also pays a dividend yield of 4.7%, with very similar coverage. However, its P / B ratio of 1.2 denotes slightly better value for money. It throws its strength in wealth management and less exposure to US markets, and BMO is a viable alternative to TD Bank.

Scotiabank (TSX: BNS) (NYSE: BNS) is another key Canadian banking stock to watch this fall. With strong exposure to Latin American markets, Scotiabank was a step behind its Big Five peers. This is because the coronavirus generally reached that region a little later. This means Scotiabank is about a quarter behind the other Bay Street bankers.

A dividend yield of 5.8% with a payout ratio of 63% makes Scotiabank a strong competitor for long-term income investors. This TSX bank stock is priced similarly to its competitors listed above. However, investors buying Canadian bank stock for long-term income will need to weigh their bullish trend on international growth before buying Scotiabank stock.

Uncertainty continues to cloud the markets

Indeed, the second wave has generally blinded the markets, tainting the bullish trend that has seen momentum explode in unlikely angles this year. While vaccine hopes are still getting thick and fast, actual implementation may take some time. Between now and then, the uncertainty is more than enough to rock the markets.

Investors should keep an eye on the performance of TSX bank shares as coronavirus cases continue to rise in western regions. From the public health crisis to consumer sentiment to economic instability, it’s a tough time to be in the banking sector. For this reason, it may be best to wait until after earnings to buy stock.

In summary, investors watching these three stocks have some key dates to put on their calendars. Scotiabank is expected to post earnings on November 24th. BMO will publish its report on December 1st. TD Bank is expected to spread the beans on December 3rd. A mixed round of earnings reports is likely, with destructive market forces still acting on stock prices to create a period of ongoing volatility.

Crazy contributor Victoria Hetherington has no position in any of the titles mentioned. The Motley Fool recommends BANK OF NOVA SCOTIA.