Canadian bank stocks seem unstoppable: this is the one I’d buy here

Canadian bank stocks still seem like a good bet, even if you’re not the biggest fan of chasing red-hot momentum. While things are looking a bit choppy and maybe even a bit shaky, I still think the banking sector has what it takes to continue the good quarters. Of course, expectations have risen significantly lately, thanks in part to some stellar results from the broad basket of Big Six names, all of which look like boats are enjoying the sector’s rising tide.

Despite some analysts’ skepticism and downgrades, I urged investors to stick with the big bank names as they rolled through earnings reports. Sometimes the bar can be raised even higher when the foundations really start to shine. Remember, many analysts, like most other investors, also felt a little cautious when bank stocks were trading at their lows just over a year ago.

After an explosive rally, many have changed their tune, but I think a reversal in momentum could prove difficult. And that makes it difficult to bet against or sell the bank stocks, unless of course you’re willing to buy back into Canada’s big banks later at higher prices.

TD Bank exceeds estimates with an exclamation point!

Either way, a new season of banking wins is upon us, and the results are pretty good so far TD bank (TSX:TD) posted a great beat in addition to a dividend increase. Shares rose just over 2% that day as shares broke above the $120 per share level for the first time.

As a value investor with a preference for buying dips, I understand why people would hesitateNot when it comes to chasing bank stocks that have soared over the past year. That said, the valuation still makes sense and the fundamentals only seem to be improving. Ultimately, aren’t these factors much more important than what a stock has done in the recent past?

In my opinion, TD Bank stock remains one of the best Canadian dividend (growth) stocks to own, period. Yes, the opportunity to get a bargain is over, but that doesn’t mean there isn’t a lot of profit to be had here.

With a decent dividend yield of 3.57% and a spectacular fourth-quarter result on the books that exceeds analyst expectations, I wouldn’t lose any sleep over the name as the comeback enters its second year under a new CEO who I’ve praised numerous times in the past. CEO Raymond Chun is the real deal, and more achievements are likely to come as the bank’s “back to winning” strategy continues to evolve.

CIBC also achieved a strong result

It’s not just TD Bank that’s chasing profits. CIBC (TSX:CM) was also shocked and impressed by the result, which also came with a nice dividend increase. CM’s shares rose more than 4% that day. And with explosive momentum, like most other Canadian bank stocks, I continue to view the name as a buy.

The 3.2% yield has fallen in recent years and the valuation is no longer as low as it used to be, now around 15.3 times the price-to-earnings ratio (P/E). Still, I think the banks continue to prove their worth as the year draws to a close and the names look set to repeat in 2026.

Between CIBC and TD, I’d have to go with the latter due to the lower entry price (shares still trade at less than 11 times price-to-earnings ratio). However, I’m not against owning both at these levels!