Bank of Nova Scotia (BNS.TO)

There was always a complaint that they did not have a wealth management side to their business. They have now taken care of that. This is the only one of the big 5 that isn’t at a 52-week high. Thinks there has been worry about emerging markets. They are in Mexico, Caribbean, Chile which are all managed well. The one thing they are not in is the US but they are doing well everywhere else. 4% dividend yield.

This bank is thoroughly committed to global expansion, especially in emerging markets and especially in Latin and South Americas.

Uniquely, among the Canadian banks, it is leveraged to what is happening around the world. Huge platform in Central and South America but also a very large emerging platform in Southeast Asia, particularly Thailand. Leveraged to the weakness in the Canadian dollar as so much of their earnings are outside of Canada. Great quarter last quarter. Yield of over 4%.

Banks have been well off their highs for several months now. It’s an OK environment for them but not a great one. Brokerage is slowing, which is a big generator of earnings for all the Cdn banks. Decent dividend yield and valuations are still good. Cdn banks are not going to be the leader over the next 6 months to a year.

[Caller asked about the long term] Bank stocks are the back-bone of stocks in the economy. He has a large weighting. Buy and put away and let the dividends grow and accumulate. It’s a good core holding. He holds BNS, TD, BMO and RY.

Banks. He does not own Canadian Banks and prefers US banks. He is worried about personal loan growth in Canada. The Canadian consumer is highly leveraged. Personal loan growth is going to decelerate. There is nothing wrong with banks and there is no risk of a real estate bubble. This is a great one if you want to own a Canadian bank because of global exposure.

This is the most international Canadian bank so is least exposed to Canadian mortgages if that is something you are worried about. Has underperformed the rest of the group by about 5% in the last month and he can’t find out why. Under $57 is a great entry point and thinks it will reach $63 in a year. Yield of 4.24%.

Earnings just came out and were basically a non-event. Stock was down marginally. Canadian investors are strictly focusing on yields and dividends. Whether we actually like a company for its growth prospects or not, we don’t care, we just want that dividend. Banks will do very well based on that investment philosophy. He just doesn’t see any growth happening in the next little while.

He is moving his money outside of Canada and Scotia Bank has a large footprint in Latin America. Likes the prospects of outside of Canada currently.

Likes their diversification including their international exposure. Has always been the most conservative in terms of how they handle credit to companies. Superbly managed. Selling at a reasonable multiple. 4.23% yield and trading at about 11X earnings.

In great shape. Has a long, deep franchise in the Caribbean and Latin America. Trades in line with the dividend yield. It is a well run bank and you should probably buy it at these levels. You will get 10-12% including the dividend.

He has all 6 banks but his top 3 holdings are CIBC (CM-T), Bank of Montréal (BMO-T) and Toronto Dominion (TD-T). The most expensive banks are the Royal (RY-T) and this one so he doesn’t think this represents the value that the others do. With his top 3, you will get decent double digit returns over the next 3 years.

There isn’t a Canadian bank that he finds of any interest at this point. Some conservative people who invest in a different way would say to buy bank stocks because you could get appreciation and you will get dividends. He is much more interested in US financials.

Has been avoiding Canadian banks in favour of US banks which have traded at lower valuation multiples over the last number of years. Cdn banks have been star performers with much better earnings growth and ROE performance but in his view some of that has been driven by a very robust commodity sector in Canada. These are areas that he thinks we could be seeing some slowdown in. This one, relative to some of the other Canadian banks, is interesting simply because of its exposure to South America, Central America and Mexico.

One third of their earnings is through international exposure, which appeals to him. You don’t have weakness to the North American economies in the same way. Acquired ING Direct. Raised the dividend twice by almost 10% in the last 15 months. Yield of 4. 2%.