# RY or BMO



## NicW11 (Mar 3, 2012)

I don`t have any financials in my portfolio yet and would like to enter in. I`m looking at Royal Bank or Bank of Montreal at the moment. They are both trading higher than I would prefer to enter in, but there isn`t really anything saying they are going to drop anytime either. Sure wish I could have got in with RY back in November when they fell! This will be a long term hold for me.

I`m leaning towards BMO. Any thoughts? Anyone feel there will be a better opportunity in coming months?

Nic


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## Patience (Mar 8, 2012)

NicW11 said:


> I don`t have any financials in my portfolio yet and would like to enter in. I`m looking at Royal Bank or Bank of Montreal at the moment. They are both trading higher than I would prefer to enter in, but there isn`t really anything saying they are going to drop anytime either. Sure wish I could have got in with RY back in November when they fell! This will be a long term hold for me.
> 
> I`m leaning towards BMO. Any thoughts? Anyone feel there will be a better opportunity in coming months?
> 
> Nic


These days the banks seem to move up and down together. Personally I put BMO in my portfolio, but really they are all very similar.


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## doctrine (Sep 30, 2011)

I have both, but would buy BMO for the higher yield and RY has increased more lately.


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## yask72 (Mar 11, 2012)

I would lean towards BMO as well. (Personally, i am debating between BMO and BNS).


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## KaeJS (Sep 28, 2010)

I like both and am not opposed to either, however, due to the recent run up in RY, and the higher yield with BMO - I would pick BMO.


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## Argonaut (Dec 7, 2010)

BNS is probably the best buy right now. Although it looks like it may be setting up for another year of sell the banks in April/May and buy again later. I will likely dump my TD shares that have been nicely DCA'ing from $71-82 if it hits 52 week highs here soon.


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## NicW11 (Mar 3, 2012)

Thanks for the thoughts. Hadn't really considered BNS at this point, but I'll take a look. BMO has the nicest dividend amonst the three. I want to add to my dividend portfolio, but also looking at GG for some short term gains (hopefully!) Probably 100 shares of each for now. I'm hoping GG will continue its course and shoot up to $52ish in the next month or two then I'll exit out and take a position in another long term hold - BCE maybe. Now if it will just follow my plan...


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## canadianbanks (Jun 5, 2009)

I don't invest in bank/financial stocks, however if I had to pick between these 2 I would go with BMO for the yield.


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## Toronto.gal (Jan 8, 2010)

Argonaut said:


> BNS is probably the best buy right now. Although it looks like it may be setting up for another year of sell the banks in April/May and buy again later. I will likely dump my TD shares that have been nicely DCA'ing from $71-82 if it hits 52 week highs here soon.


Though the question was not about BNS, I agree that at present, it's a better buy than BMO/RY.


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## Patience (Mar 8, 2012)

canadianbanks said:


> I don't invest in bank/financial stocks, however if I had to pick between these 2 I would go with BMO for the yield.


Coming from a guy called canadianbanks, that's surprising. Are you staying out because it's an industry-employment risk, or are you generally seeing something you don't like with the sector?


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## Cal (Jun 17, 2009)

RY or BMO. The question is almost would you rather large market exposure or a good dividend.


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## canadianbanks (Jun 5, 2009)

Patience said:


> Coming from a guy called canadianbanks, that's surprising. Are you staying out because it's an industry-employment risk, or are you generally seeing something you don't like with the sector?


Well what I don't like in the sector is the over-exposure to the Canadian housing bubble. Everybody is saying that the banks bear little to no risk in case of sudden bubble burst because of CMHC, however I don't believe this for a minute. When the bubble burst the personal lending will quickly dry up and this will affect the banks very negatively. Of course then the banks will have to deal with all the bad loans...


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## Cal (Jun 17, 2009)

On that note, I had read something the other week about TD and CIBC either selling or shuting down their higher risk mortgage arms. Looks like some of the banks are trying to contain their expsure to mortgages thay may or may not be repaid in the event of a economic downturn here.


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## KaeJS (Sep 28, 2010)

Although it's always wise to reduce high risk mortgage exposure when you can, I really don't think Canada will undergo anywhere near the extent of the housing crisis the US witnessed. I believe in a housing correction, but I don't believe you're going to have people with too much debt, defaulting on mortgages, and then housing prices becoming less than the mortgage owed. There's too much money coming into Canada, and with shows like "Till Debt Do Us Part" etc, etc, There will be more influence for people to take care of their finances, especially after the 08/09 crash as well.

I just don't think we'll experience anything catastrophic in Canada that would (currently or in the near future) hurt the Canadian Banks.


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## Square Root (Jan 30, 2010)

I would say any of the banks other than CIBC would be a reasonable pick. The bank with the best stategy and prospects would definately be TD. Long term you can't go wrong. I own them all but CIBC. My biggest position is TD followed by RY. If you are holding long term don't worry so much about entry point.


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## arc (May 19, 2012)

Is it a good idea to sell BMO right now (make a quick 1% gain)? Since all the analysts are saying to hold BMO but NOT to buy? thanks


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## arc (May 19, 2012)

Square Root said:


> I would say any of the banks other than CIBC would be a reasonable pick. The bank with the best stategy and prospects would definately be TD. Long term you can't go wrong. I own them all but CIBC. My biggest position is TD followed by RY. If you are holding long term don't worry so much about entry point.


What CIBC??? They have the best PE ratio and performance out of all the banks?


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## atrp2biz (Sep 22, 2010)

Why not CIBC? Two words--risk management.


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## Jungle (Feb 17, 2010)

BMO has really disappointed me lately with no dividend increase, been holding for a while now. RY has delivered two increases totaling over 14% during the same time they did nothing. A couple more like this and the yield on cost will be the same as BMO with greater ROE and growth in RY.


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## Eder (Feb 16, 2011)

arc said:


> Is it a good idea to sell BMO right now (make a quick 1% gain)? Since all the analysts are saying to hold BMO but NOT to buy? thanks


And the analysts are rich and provide insight thru the goodness of their hearts....err....maybe they are worthless?


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## KaeJS (Sep 28, 2010)

In the BMO Conference Call today, I think some guy from Desjardins Securities asked again about the dividend increase. Whoever it was on the board that responded did not seem too happy and slightly aggravated by the question. For some reason, it seems like the board really does not want to increase the dividend until 2013. 

However, BMO policy is to pay out 45-55% of earnings to shareholders. With an adjusted EPS of $1.44 and dividend of $0.70, they are cutting it close at a 48.6% payout ratio.


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## doctrine (Sep 30, 2011)

They're going to have to soon. They're the only major bank not to in the last 5 year


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## 44545 (Feb 14, 2012)

Most of the Canadian banks offer DRIP and OCP programs. Why not buy into them that way and avoid all fees?
In fact, you'll get a discount on share purchases that way.

http://www.dripprimer.ca/canadiandriplist


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## Nemo2 (Mar 1, 2012)

We moved from BMO to TD a few years back........we own some TD/BNS/RY, no BMO/CIBC....figure if we don't want to deal with them then we don't want to hold them either.


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## Toronto.gal (Jan 8, 2010)

CJOttawa said:


> 1. Most of the Canadian banks offer DRIP and OCP programs. Why not buy into them that way and avoid all fees?
> 2. In fact, you'll get a discount on share purchases that way.


1. I do this as well because I use the OCP program on a regular basis & not only to avoid commissions & for the discount, but also because I like to reinvest the full dividends. However, I also have synthetic DRIPS because through the OCP program, shares can only be purchased on a set-date [once per month/once per quarter], but I like to be able to buy shares whenever there is a good opportunity.

2. Not guaranteed however; CIBC reduced the discount from 3% to 2%, to now 0% effective July/2012.

https://www.cibc.com/ca/pdf/investor/q112-drip-update.pdf


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## m3s (Apr 3, 2010)

Toronto.gal said:


> I like to be able to buy shares whenever there is a good opportunity.


I didn't know you can with synthetic DRIPS either? I kind of ignore DRIPS for this reason.. I just pool the various dividends into my next purchase etc. Maybe I'm a bit OCD on having even numbers of shares as well

I bought BMO last week. No specific reason vs RY or others (own some RY and BNS as well)


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## KaeJS (Sep 28, 2010)

mode3sour said:


> I bought BMO last week. No specific reason vs RY or others (own some RY and BNS as well)


Good call. Cheap price.:biggrin:


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## GOB (Feb 15, 2011)

KaeJS said:


> Although it's always wise to reduce high risk mortgage exposure when you can, I really don't think Canada will undergo anywhere near the extent of the housing crisis the US witnessed. I believe in a housing correction, but I don't believe you're going to have people with too much debt, defaulting on mortgages, and then housing prices becoming less than the mortgage owed. There's too much money coming into Canada, and with shows like "Till Debt Do Us Part" etc, etc, There will be more influence for people to take care of their finances, especially after the 08/09 crash as well.
> 
> I just don't think we'll experience anything catastrophic in Canada that would (currently or in the near future) hurt the Canadian Banks.


You do realize personal debt levels here are higher than they ever were in the US, right? As is home ownership rates. People are definitely not taking care of their finances. It can certainly happen here - the influence of overseas money is greatly exaggerated, though it is a factor.


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## londoncalling (Sep 17, 2011)

doctrine said:


> They're going to have to soon. They're the only major bank not to in the last 5 year


This was one of the reasons I bought the stock awhile back. I figured being the only bank not to have had an increase they would soon follow suit. Good thing it wasn't the main or only reason and I plan to hold this stock long term.


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## Dopplegangerr (Sep 3, 2011)

Why do you guys not like CIBC? 
PE is 10.26 (the lowest at the moment in Canadas big 5 banks)
Yield is 5.09 (the highest at the moment in Canadas big 5 banks)

Also rated near the top in strongest banks this year. 








Whats am I missing?


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## Toronto.gal (Jan 8, 2010)

I DRIP my bank stocks, so the cheaper they get, the more free shares the dividends will buy me.


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## KaeJS (Sep 28, 2010)

GOB said:


> You do realize personal debt levels here are higher than they ever were in the US, right? As is home ownership rates. People are definitely not taking care of their finances. It can certainly happen here - the influence of overseas money is greatly exaggerated, though it is a factor.


Understood, but we also don't have investment banks and insurance companies throwing around CDS deals like a bunch of kids exchanging different coloured marbles in the playground.


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## al42 (Mar 5, 2011)

Boy, BMO back down to $54.5 yesterday close to 52 week low. i picked this up at the beginning of the year for just under
$55.00 and sold it a few weeks later for around $58.00. Might take a flyer on this again. The QTR. didn't look that bad I guess the 
market was not happy they didn't increase the divy?


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## rassmy (May 7, 2010)

If I want to add bank to my protfolio now I would pick BMO. Trading at below 55$, It is the cheapest canadian bank, PE ratio around 9.6.


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## Dopplegangerr (Sep 3, 2011)

I am spewing because I bought RY for 49 and 45 and could have sold it off for 59. making a couple grand profit, instead I just held it. I am sure it will go back up but would have been nice to time the market a little


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## al42 (Mar 5, 2011)

I think the banks might go lower from here with all the problems in Europe but I still think BMO below
$55. is a pretty safe bet.


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## Toronto.gal (Jan 8, 2010)

al42 said:


> BMO below $55. is a pretty safe bet.


When I first bought in late 09, it was just above $50, and it seems we might test that low again.

- RY - accumulated shares in 2011 [the low $40's made it easy].
- BMO/BNS - my focus for 2012, but waiting before adding more.


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## doctrine (Sep 30, 2011)

BMO, CIBC and BNS are all testing their 2011 low. RY would have to fall another 10% so I am looking at BNS now.


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## humble_pie (Jun 7, 2009)

Dopplegangerr said:


> I am spewing because I bought RY for 49 and 45 and could have sold it off for 59. making a couple grand profit, instead I just held it. I am sure it will go back up but would have been nice to time the market a little



this is what options are for. Long bank stocks combined with sale of short otm calls & sale of short otm puts are a lifetime strategy, because of the high dividends that banks traditionally pay & the concomitant dividend tax credit.

the option sales also produce tax-favoured income in the form of capital gains. Right now, going out 7 or 8 months to jan/13, BMO plus the above strategy - it's a strangle - would yield roughly 10%, all in tax-favoured returns.

i've singled out bmo because, although the facts are not yet known, nevertheless it appears that RY may have somewhat more european exposure than the other 2 in the classic triad (td, bmo & ry.) If i had a choice, i'd go with td or bmo at this moment. The same strangle can be utilized with all of them.

i'm leaving out bns for the time being because i don't know anything about the effects of the current spanish tumult on this bank's relationship in south america with banco santander.

in the past i've avoided this excellent bank for the simple reason that its option markets are more dormant than those for td, ry or bmo.

also, bns has raised nearly 3 billion during the past 4 months, partly through a 1.66 billion share issue in february & partly from the sale of its toronto office towers for 1.27 billion.

one would have to dig deeper to find out their plans for this cash. But perhaps a strong hint can be obtained from their recent purchase, for half a billion dollars, of majority interest in a leading Colombian bank.

bns has always had the strongest latin american footprint of any chartered canadian bank, so if they're planning to invest the windfall 3 billion in selected central & south american financial institutions, one could say Olé.


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## arc (May 19, 2012)

Dopplegangerr said:


> Why do you guys not like CIBC?
> PE is 10.26 (the lowest at the moment in Canadas big 5 banks)
> Yield is 5.09 (the highest at the moment in Canadas big 5 banks)
> 
> ...


I agree, nobody here has explained their dislike of CM. IT LOOKS LIKE A great buying oppt to me...


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## Just a Guy (Mar 27, 2012)

Having dealings with all the banks, I'd rate them, based on customer experience, from best to worse as TD, BNS, BMO, RY, CM.

When I looked into exposure to things like the US meltdown, they seemed pretty close to being in a similar order from least exposure to most (I think RY and BMO swapped).

When I looked at potential earning power as an investment, the list reversed. 

When I looked at the risks, highest to least, it was also reversed.

All the banks except BMO increased their dividends, which would add pressure for them to do so as well soon I would think.

If Greece finally does melt down, I would expect the banks to get hit, and thus open a buying opportunity. I don't think banks are risky, but I also don't think they have a quick upside unless a crisis knocks their prices down to silly levels like they did in 2007.


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## Jungle (Feb 17, 2010)

CIBC has done something in the past that I don't know about- I think this is why they hate it. Here, a lot of people on the forums hate CIBC. I saw an analysit on BNN saying the same thing, he would stay away from CIBC and choose TD. 

I would like to know exactly what they did to screw up in the past and if there is the same risk going forward or just people are holding a grudge. Really the p/e is in the 9's now, the profits are incerasing and the are rated a very safe bank by bloomberg.


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## Financial Cents (Jul 22, 2010)

Good call, DRIPping bank stocks. I do the same.


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## Potato (Apr 3, 2009)

Jungle said:


> CIBC has done something in the past [...] I would like to know exactly what they did to screw up in the past...


There was an article in 2008 (_before _most of the financial crisis mess) that called CIBC "the bank most likely to walk into a sharp object." They took a big charge related to Enron, then a few years later had by far the largest exposure to the subprime/ABCP/CDO market (another article pegs it as twice the combined total of the other Canadian banks).

Now there's rumours that CIBC is trying to sell FirstLine, which they built into one of the largest mortgage brokers in the country. If you're already thinking that CIBC has a propensity to step on rakes or walk into sharp objects, then you immediately start to wonder why they would be looking to sell a mortgage arm: _how _did they get so big, again? So maybe there's nothing wrong at all with it, but maybe an investor has to consider that CIBC has once again put their foot into something and the commission-only salespeople have been writing bad mortgages that are now at risk of stinking up CIBC's balance sheet.


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## Square Root (Jan 30, 2010)

I don't own CIBC. Originally it was because the were the bank that couldn't shoot straight. Now it is because they have no growth stategy. In my view TD has the best growth stategy and by far the best experience at executing it, followed by BNS and RY. BMO has always had problems executing whatever stategy they did have.


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## Square Root (Jan 30, 2010)

@Jungle What did they do to screw up? Pretty long list starting with their retreat and big write offs in the US in the late 90's, ENRON write off cost them over $2billion, 2008 melt down losses cost them about $10billion(TD about $700million), but the real problem is the fact that they used to be about the same size as the Royal in CDN retail banking but now they are puny in this most profitable business. TD on the other hand is now challenging the royal for domestic retail banking supremacy while 15 years ago they were a distant 5th. As a long term hold I think TD is best and has certainly outperformed CM over the last several years. Big picture is important in this case, I think.


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## Jungle (Feb 17, 2010)

Thanks for the explanation guys, very well said. 

In regards to CIBC selling Firstline, I read the idea behind that was to get customers to come into the branch so they can be up sold on other banking products. CIBC believes this will make more money then just channeling mortgage business through brokers. 

I scratched my head when I read this.


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