# Looking to add a Bank stock



## indexxx (Oct 31, 2011)

I'm interested in opinions of which Canadian bank to have a piece of and why, and what a good purchase point might be.

Thanks!


----------



## Spudd (Oct 11, 2011)

TD's analysts like BNS and CM. I own those 2 plus BMO, which I bought because it had a very nice dividend at the time. 

I have no clue for entry point, I just tend to buy things willy-nilly.


----------



## doctrine (Sep 30, 2011)

Any of the biggest 6 are great and lots of argument for the next few after that. You could always just go with the dogs of the banks strategy, and buy a few of the highest yielding ones, which is BMO and CM by a fair margin.


----------



## Square Root (Jan 30, 2010)

i think concensus would favour TD/RY/BNS but who knows. BMO has always been the highest yielding bank and TD the lowest. Do you want yield or growth? i own them all except CIBC. biggest position is TD next RY. i think TD has the best stategy and has proven they can execute. BNS can also execute but their strategy seems a little more diffuse to me. RY has a big push on wealth management but I worry about their emphasis on wholesale trading businesses. These can be very volatile and ROE's not as high as retail banking. TD's Canadian retail banking business has an ROE in the mid 40%s. Remarkable even if it is growing at less than 10%.


----------



## gibor365 (Apr 1, 2011)

Check also NA , Payout ratio about 40%. 3.75% yield, constantly increasing dividends (21% div growth in 3 years), and ... ex-div day upcoming Tue


----------



## humble_pie (Jun 7, 2009)

banks are like socks. You buy em on sale. Keep the sock drawer going. Low maintenance.

it's rare to find a hi-definition fashion sock.












_- stella mcCartney does socks for the 2012 olympic team great britain_


----------



## Argonaut (Dec 7, 2010)

I find it hard to believe Royal still has a higher market cap than TD. The latter is simply a higher quality stock and company, with Canada's top CEO in Ed Clark. The TD footprint in the US is really big, with room to grow still. Scotiabank is the other interesting one, with their international expansion being the key to the future. 

Like humble says, it's best to buy them on sale. TD was at $68 for a day or so last year, and I told my colleagues at work it was an outrageously good buy at the time. And here too I think. Right now it would be a great buy at $72 for that same 4% yield. Of the five banks, I liked BNS only at recent prices last week (4% yield). It has risen since then so I would wait for that number again at least.

If trends from the last couple of years continue, banks will be at better prices in the late summer/fall. One cannot fault someone for jumping into one for a long-term hold at any time though.


----------



## FinancialRebel (Mar 19, 2012)

I think alot depends on your opinion of what area of the world is going to have the most growth. For the most part, the major banks have a similiar risks based in Canada, so you have to think about what their foreign holdings are. The ones I follow are below.

TD - as mentioned above, they are really pushing into the states. If you believe positives things will happen there, i would consider this as a lower risk play.
BNS - Have more abroad exposure with a big push into latin America. It`s probably the most diversified globally of the major banks.

Now the ones im most interesting in right now are the Canadian banks, like national bank, and particularly, canadian western bank. CWB is largely tied to the western economy, and with alberta having a change to go through another boom of sorts, this is definitely something im watching right now.


----------



## gibor365 (Apr 1, 2011)

Argonaut said:


> . One cannot fault someone for jumping into one for a long-term hold at any time though.


This is exactly what I think ...for 10+ years hold , entry point is not so crucial... I'd like to add to banking positions on monthly or QT basis, but because of commission fees don't want to do it...
I just don't understand why TDW won't allow me to PACC TD stock with no commission?!

BTW, in your opinion, what % of portfolio is reasonable to have in CAD banking sector?


----------



## Argonaut (Dec 7, 2010)

gibor said:


> BTW, in your opinion, what % of portfolio is reasonable to have in CAD banking sector?


10% seems good to me, though those heavily invested in the Canadian market or individual Canadian stocks probably have more. I'm thinking percentage of whole portfolio and not just stocks.


----------



## indexxx (Oct 31, 2011)

Then again, if I already have some exposure to the banks via TD eSeries Canadian Equity, that should suffice, yes?


----------



## gibor365 (Apr 1, 2011)

Depends what is % of your portfolio in TDB900


----------



## Shnoobs (Feb 28, 2012)

I bought TD at 71.00 and just sold at 85.00, second year in a row I did that. TD has been more of a growth story than yield play unlike BMO which I also own for the yield. Bought it when they purchased M&I and still hold. Never had the gains that TD has traditionally enjoyed. Going to wait until fall to look at more bank stocks (seasonality).


----------



## Islenska (May 4, 2011)

Trouble is you are buying at premium levels, not a whole lot of upside and rather smallish dividends.
A slightly different course that could pay out would be the beaten down insurers like Sunlife dividending 6% and well off normal levels.
Hard to believe I remember looking at TD $38 in the 08 crash, should of would of coulda....


----------



## PMREdmonton (Apr 6, 2009)

You are probably best off with one of National, Royal, TD or BNS. They have been the most consistent for the longest period of time. All have managed to more than double their dividends over the last 10 years. If you believe the economy is strengthening then RY is the play with their investment banking assets. If you believe Latin America is going to be huge than BNS is the play. If you think times will be tough go to TD which is the strongest retail bank. National is always a good choice because they are very shareholder friendly and they are the smallest so they have the furthest to grow.

If you want a simple way to choose right now you could use the value ratio which is PE/dividend yield. Right now CM is the choice followed by BMO, NA, BNS, TD and RY. Of course, some might say that is the opposite order of the quality of the franchises.


----------



## Eder (Feb 16, 2011)

I think it is best to buy the bank that is currently in the penalty box...recently it was RY at $45, then BNS at around $49 I think. Currently I think BMO is the best buy, but as others stated it might be better to wait till some bad news out of Europe this Summer to get in 5% cheaper than today.


----------



## PMREdmonton (Apr 6, 2009)

Or better yet maybe get a bank that is in Europe but does most of its banking elsewhere and is on solid footing. I'm thinking of HSBC. The beauty of this one is you can buy the ADR and not get dinged with any withholding tax because of the tax treaty the US has with the UK. I think it has PE < 10, yield > 6% and P/B < 1. You won't find metrics like that anywhere near a Canadian bank. Nevertheless they are doing well and quite strong and have enormous exposure to Asian growth.

Barclay's could be another consideration from the UK banking tree but the yield isn't as good.

I also like STD from the European banks because of its strong Latin American exposure. They are extremely profitable and still a good growth story but earnings will take a hit the next couple of years due to real estate writedowns from the Spanish market which they want to clear off of their books. Nevertheless, they will not cut dividends this year as they have plenty of cash flow and it yields 11% right now. The only thing to keep in mind is Spanish dividend withholding tax of 19% for the ADR but you can apply for a credit if held in a taxable account.


----------



## doctrine (Sep 30, 2011)

I have a piece of the big 6 banks, together they make up 18% of my Canadian portfolio. Bank dividend growth is starting to pick up steam in particular and that will eventually be reflected in the stock prices.


----------



## gibor365 (Apr 1, 2011)

doctrine said:


> I have a piece of the big 6 banks, together they make up 18% of my Canadian portfolio. Bank dividend growth is starting to pick up steam in particular and that will eventually be reflected in the stock prices.


Same here  even % allocation similar ... Also I agree with Eder, if one of big 6 Cdn banks is lagging in 1 or 2 quoters, it will catch up lately


----------

