Bank of Nova Scotia (BNS.TO)

Everybody should own one of the Canadian banks. There is some volatility, but this has the offshore Hispanic exposure in Central and South America, areas that are doing quite well economically. Dividend yield of 3.9%. (Analysts’ price target is $86.)

He likes this for its international exposure. It has been a great rewarder to shareholders over time.

Which Canadian bank should I choose? You could probably pick them all, but if you wanted to pick one only, he would pick Bank of Nova Scotia (BNS-T). Their International side is coming along. They are pretty good at wielding the scalpel, so costs are always a good area of focus for them. Expects the group will grow at 8%-9%.

Canadian banks have done tremendously well over the last 10 years. The regulators are doing a great job of making sure the industry is safe. Everyone should own banks. There has not been any big write-downs in the banks recently. They are firing on all cylinders. Don’t overpay for them. BNS-T has international exposures to commodities, which has held them back a bit.

A stock that has a different approach than your typical Canadian stock in that they are in the Caribbean and in Central and South America. Economically, those areas are growing at a much faster pace than the Canadian and US economies.

Toronto Dominion (TD-T), Bank of Montréal (BMO-T) or Bank of Nova Scotia (BNS-T)? He likes the financials. In Canada, the banks and insurers have underperformed the rest of the sectors this year. Interest rates starting to move higher is good for banks. This bank has a lot of their revenues coming from international markets and this is a good name. He would prefer a combination of TD and this bank.

(A Top Pick Jan 6/16. Up 50%.) He still likes this. Canadian banks still give you good rates of return.

Today you are buying this for Price/Book that is in the middle of the pack. Looking forward, it is at about 11X forward earnings. This has done a lot of restructuring over the last couple of years. They’ve put a lot of money into IT, and benefits have begun to show in the last quarter. Dividend yield of 4%. (Analysts’ price target is $85.)

Brookfield Infrastructure (BIP.UN-T) or Bank of Nova Scotia (BNS-T) for better growth? Financials is a group that he has been in favour of for some time, but prefers US to Canadian. All banks will benefit if we wind up in a rate rise cycle, but Canadian banks probably less likely. If he had to buy one of these 2, he would probably buy Brookfield Infrastructure.

Canadian banks have all been affected by Home Capital (HCG-T), and this is now back to an average valuation. It is 50% international and 50% Canadian, so you don’t have to worry about the US president doing anything crazy. They are really starting to get their act together in the last few quarters in a couple of the South American countries. The stock has had a 10% pullback, Dividend yield of 4%. (Analysts’ price target is $85.)

TD-T vs. BNS-T. He has a small exposure to the Canadian banking sector, but is more exposed to the Canadian insurance sector. His preference is BNS-T because it has the smallest footprint in Canada. A lot of growth is dependent on capital markets. TD-T has a big US exposure and he likes that, but these are not his choice.

(A Top Pick June 2/16. Up 21%.) This bank has had tremendous focus on cost control, as well as technology development, over the last few years. The new CEO has made them more competitive in a modern environment. The most internationally diversified of all the Canadian banks. It has great exposure to South America, so if there is an uptick in materials, etc., that will do very well for them. Still a Buy. (See Top Picks.)

Banks are not cheap. This is one of the cheaper ones because its return on equity is stronger than other banks because it is the most international banks of the family. It is driving higher returns on equity than other banks. This is not a bad one to be picking away at.

(A Top Pick May 4/16. Up 28%.) Had felt this was the cheapest of the Canadian banks, had the best opportunity, and was less understood. It has very good growth. Emerging markets are turning.

A pretty good exposure in Latin America, where the growth rates are higher. Probably a little riskier, but probably will grow a little better. The regulatory environment in Canada has been so good for so long. In his career, all the US banks have gone bankrupt at some point.