Why bank stocks are always perfect for a TFSA
In mid-May, I discussed my top three banking stocks for the remainder of 2020. The COVID-19 pandemic destroyed assessments of bank stocks and investors looked at the damage as the banks released their results of the second quarter in May. Profits fell sharply, but bank stocks still got a boost as investors prepared for economic reopening.
Bank stocks offer steady capital growth and solid income. This can lead to fantastic tax-free accumulation in a long-term focused portfolio.
National Bank (TSX: NA) is the smallest of the six major banks, but it is a big hitter in the province of Quebec. National Bank shares fell 9.5% in 2020 at the close of June 4. However, the action rose 16% month-over-month.
In the second quarter, National Bank reported net earnings of $ 379 million, or $ 1.01 per share, compared to $ 558 million, or $ 1.51 per share, the previous year. Like its peers, National Bank saw its provisions for credit losses increase in the second quarter. He reported provisions for credit losses totaling $ 504 million. However, earnings before provisions for credit losses and income taxes on a taxable equivalent basis reached $ 991 million, up 20% from Q2 2019.
The board of directors declared a quarterly dividend of $ 0.71 per share, representing a solid return of 4.4%. Better yet, National Bank has a favorable price / profit ratio of 10 and a price / book value of 1.6. Like his peers, he has a fantastic track record and an excellent record as a dividend payer. National Bank is an excellent long-term investment in a TFSA.
A stock that will increase due to demographic changes
In early May, I targeted Jamieson Wellness (TSX: JWEL) as a must-have super stock. Jamieson’s shares climbed 23% in 2020 at the close of June 4. The stock is up 67% year on year. This is a stock to store in your TFSA for years to come.
Jamieson is a developer, manufacturer, distributor and distributor of supplements and natural health products. A recent Grand View Research report predicts that the global food supplement market will be worth $ 230 billion by 2027. This would represent a CAGR of 8.2% since the start of the forecast period. Population aging is expected to contribute to the success of this industry as older consumers are more likely to source natural health products and supplements.
In its first quarter 2020 results, Jamieson announced adjusted net income of $ 7.8 million, up 20% from Q1 2019. The COVID-19 pandemic has brought public health to light, which resulted in increased demand for Jamieson products in March. In addition, its international activity recorded growth of 51.3% during the quarter. This is due to strong growth in Europe and China.
Jamieson last announced a quarterly dividend of $ 0.11 per share, representing a modest return of 1.4%. The stock is currently trading a few dollars from its 52-week high. Value investors may want to wait for a more attractive entry point. In any case, Jamieson is well positioned to deliver good results to its shareholders in the future.
Speaking of the best actions for a TFSA …
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