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the S&P/TSX Composite Index rose 35 points in early morning trading on Tuesday, July 4. Meanwhile, the The S&P/TSX Composite Financial Index slightly lower to start the trading day. Today, I want to compare two of the top Canadian bank stocks; Bank of Montreal (TSX:BMO) and Canadian Imperial Bank of Commerce (TSX:CM). Which bank stock is better to buy in early July? Let’s jump in.
Should you buy Bank of Montreal in early summer?
Bank of Montreal stock is up 3.9% month over month since early morning trading on July 4. The bank’s stock is down 3.6% year to date in 2023. Investors who want to see more of the bag -or its performance can be played on the interactive price chart below.
This bank released its earnings for the second quarter of fiscal 2023 on May 24. In the second quarter, BMO reported adjusted net income of $2.21 billion – up from $2.18 billion last year. However, adjusted earnings per share (EPS) fell to $2.93, down from $3.23 in the second quarter of fiscal 2022. Provisions for credit losses increased to $1.02 billion in the second quarter of 2023. – up from $50 million last year. .
For the first half of fiscal 2022, BMO posted adjusted net income of $4.48 billion or $6.15 per share — down from $4.77 billion or $7.12 in the first half of fiscal 2022. Adjusted net income in BMO’s Personal and Commercial Banking segment fell 8% over the year to $864 million in the second quarter. However, adjusted net income increased 47% year over year to $866 million in its US Personal and Commercial Banking segment.
Shares of this bank stock currently have a solid price-to-earnings (P/E) ratio of 11. Meanwhile, it offers a quarterly dividend of $1.47 per share. That represents a 4.9% yield.
The CIBC stock case in July
CIBC stock was down slightly in mid-morning trading on Tuesday, July 4. Its shares are up 1.7% in the year-to-date period. However, the stock is down 10% year over year.
Investors saw the bank’s second quarter fiscal 2023 earnings on May 25. CIBC reported revenue growth of 6% to $5.70 billion in the second quarter of fiscal 2023. Additionally, adjusted net revenue fell 2% to $1.62 billion, and adjusted diluted EPS fell 4% to $1.70. Canadian Commercial Banking and Wealth Management posted adjusted pre-tax earnings of $663 million — up $15 million on the back of solid volume growth. Meanwhile, its US Commercial Banking and Wealth Management segment delivered adjusted earnings of $312 million — up $24 million from last year.
In the first half of fiscal 2023, CIBC generated total revenue of $11.6 billion — up from $10.8 billion in the first half of fiscal 2022. Meanwhile, diluted EPS fell to $2.15 compared to $3.64 last year.
This bank stock finally has a favorable P/E ratio of 10. CIBC offers a quarterly dividend of $0.87 per share, which represents a tasty 6.1% yield.
The verdict
Both bank stocks are at even footings value-wise at the time of this writing. For that reason, I am more attracted to CIBC for its superior dividend yield in early July.