Citigroup Inc. (C)

Financials is definitely his favourite space at this point going forward. With rising interest rates, and presumably a lighter regulatory environment, this is poised to do well. Given that they have slightly underperformed some of the other banks, he thinks their potential for large capital returns through dividends and stock buybacks is great for shareholders. Trading at about .83X Price to book ratio, which is a definite discount to all the names in that large bank space in the US. Dividend yield of 1.05%. (Analysts’ price target is $65.)

(Top Pick Dec 9/16, Down 0.3%) He was expecting them to move up, but he still likes it.

Financials are his favourite. This is his favourite large cap finance and has been for some time. It is trending at a discount to its book value. Stick it away for the long term and don’t follow it on a daily basis.

He loves US banks. These banks are way overcapitalized. They were levered 19 times previously and are only just under 8 times here. They have a massive amount of capital to use in loans or return to shareholders. Dividends are peanuts. His model price is $66.23, a 15% upside. (Analysts’ target: $64.43).

He likes it. Finally conditions are coming together to let them break out into higher ground. They have good upside, and a lot of it.

This has done well and is still cheap. One of the more international players. Dividend yield of 1.06%. (Analysts’ price target is $63.96.)

US banks have not done anything for three years or more. 2009 was a low, but long term they have been trading sideways. Since election night a lot of these stocks have literally come alive. His model price is $66.61, or an 8.5% upside, but he would ignore that. The dividend has been severely repressed. He sees them substantially increasing them. (Analysts’ Target: $63.07).

Bank of America (BAC-N) or Citigroup (C-N)? He prefers Bank of America because they have done a very good job of exiting low margin businesses. Also, they have a very strong retail franchise in the US.

This and BAC-N are both great companies. Of all the money center banks these are the ones that got into the most trouble during the financial crisis.

To add to his TD holdings?The biggest risk most investors make is concentration risk, having all your eggs in one basket. Since you already own Toronto Dominion, there is absolutely no reason to buy another US bank. He would suggest you look at FirstCash (FCFS-N) instead.

US banks have averaged trading at about 2X BV. For many years, they have traded at 3 and 3.5 times Book Value. BV has been depressed, because people have been very conservative in valuing their loan books, because of all the regulations. This bank has 29,000 compliance officers. The billions of dollars that have been layered in because of the Dodd Frank and the new regulation, is enormous. These of the types of companies that can double, and you are not taking a ton of risk. They are under owned by institutional investors. This should be a big part of portfolios in the current market. (See Top Picks.)

Financials in the US have done very well recently because of the belief of higher interest rates and deregulation. This is a bit higher on the risk level, but if you believe in the long-term future, it is a more leveraged name to play. In the 1^st quarter of 2017, you might see a better buying opportunity.

This is cheap compared to tangible book. Investors should be looking at things that have been left behind and are cheap. Don’t buy the rich ones, buy the cheap ones. This is trading at a tangible book of about .75, and has a long way to go. You can buy this below where it was in the middle of 2015. It is about to make a 52-week high and break out. Dividend yield of 1.1%. (Analysts’ price target is $59.70.)

In the last 4 years, the Fed has been restraining the banks from even increasing their dividend. If the banks do well, America will do well. This is a long-term secular story. There is a lot of runway in terms of expansion of their earnings if interest rates go up and they can re-lever their balance sheets. Dividend yield of 1.11%. (Analysts’ price target is $59.70.)

One of the largest banks in the US, and in the world. This sector is probably a good area to be involved in for the next year or so. US banks were under a bit of pressure with a slower than expected rise in rates. Now, with a Trump victory, the prospects are for slightly faster growth. Has a relatively low dividend level, but it is a safe dividend and you are likely to see increases in the coming years.