Looking for a way to make your portfolio more defensive? Arguably one of the best ways to secure a portfolio is to gain exposure to stable financials stocks. If you’ve eschewed the Big Six so far and want to pack some sturdy financial tickers, the following mix of bankers, insurers, and financial service providers make up some of the best defensive dividend payers on the TSX index.
National Bank of Canada (TSX:NA)
Up 0.93% in the last five days, the banker that makes the Big Six the Big Six (it’s sometimes excluded, leaving the Big Five) saw one-year past earnings growth of 10.1% that beat the Canadian banking industry average of 8.9% for the same period. National Bank of Canada’s five-year average past earnings growth shook out at 7.5%, just missing the industry status quo of 7.9% for the half-decade.
With more inside buying than selling of National Bank of Canada shares in the last three months, it’s a strong buy at the moment, with decent valuation and passive income to boot, though its outlook in earnings over the next one to three years could be higher. Highlights of this stock’s data include a P/E of 10.3 times earnings and dividend yield of 4.19%.
Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM)
Using this Big Six ticker as a benchmark, we can see right away through CIBC’s P/E of 9.6 times earnings and P/B of 1.5 times book that it can compete with the TSX index on value. With a healthy balance sheet and some inside buying in the last three months, it’s certainly a solid choice.
It’s got a nice sized dividend yield for a TSX banker, coming in at 4.86%. While its outlook could be better, a 4% expected annual growth in earnings isn’t too far off the industry average, and it’s back up with a decent track record: witness a one-year past earnings growth rate of 11.4% following on from a five-year average rate of 10.8%.
E-L Financial (TSX:ELF)
Switching it up from bankers to insurers, let’s start by looking into this popular TSX index financial services stock. Up 3.34% in the last five days at the time of writing, E-L Financial has seen more inside buying than selling of its shares. It’s undervalued with a P/E of 6.3 times earnings and P/B of 0.6 times book and pays a dividend yield of 0.62%, backed up with a 9.8% expected annual growth in earnings.
Industrial Alliance Insurance and Financial Services (TSX:IAG)
Undervaluation mixed with passive income and some projected growth make this popular insurer one of the best non-Big Six stocks on the TSX index. A P/E of 7.9 times earnings and P/B of 0.9 times book show just what good value for money investors would be getting if they bought at today’s prices, while a dividend yield of 3.82% gives a further incentive to do so. A considerable amount of inside buying in the last three months indicates that insider confidence in Industrial Alliance Insurance and Financial Services is high.
The bottom line
E-L Financial’s one-year past earnings growth of 3.1% isn’t too dissimilar from Industrial Alliance Insurance and Financial Services growth rate of 10.6% for the same period. Indeed, high growth is not the domain of financial stocks on the TSX index. However, for a mix of dividends and heathy balance sheets, the above tickers are strong choices if you’re shopping for dividend stocks in a defensive sector.
- How to Turn Your TFSA Into a $1,000/Month-Paying Tax-Free Income Stream
- 3 Big Mistakes to Avoid With Your RRSP
- Turn Your TFSA Into an Massive Income Machine With These 8% Yielders
- Marijuana Investors: Did You Just Miss Out on The Buying Opportunity of the Year?
- Top stocks for 2019
- Two New Stock Picks Every Month!
Fool contributor Victoria Hetherington has no position in any of the stocks mentioned.
The Motley Fool’s purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool Canada’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Motley Fool Canada 2019