Canadian Imperial Bank of Commerce (CM.TO)

This was the superstar of Q2. A lot of that has to do with the refreshing changes that Victor Dodig has been making good on. They really gained some serious market share in the Canadian personal banking space. They’ve gotten into the US. Most Canadian banks are trading relatively rich compared to their historical values.

(Market Call Minute.) At current levels, he would be hesitant to buy this.

It will most likely split. It may have gone down because of the tax on foreign home buyers out west.

This is the worst of the 5 big banks at this point. They just made a US acquisition and paid 17X, and it trades at around 11X. It is likely going to be dilutive. They are going to go from the best balance sheet, highest CET1 to the worst as a result, with no earnings per share growth for the next little bit. The stock is OK, but you can get a much better growth rate and a very similar valuation with one of the other banks. He would go Royal (RY-T) or Bank of Nova Scotia (BNS-T). (See Top Picks.)

The only one of the major 5 banks that he doesn’t own. The total return, versus the other 4 for the last 30 years, this one is a few basis points lower. It is now a much different organization than it was 3-4 years ago, and he likes the strategy tact they have taken as it relates to their dividend. Have gone to a higher payout model. However, they have just done a large US acquisition, and plan to do more to get to 10%. Wants to see how that goes, but is interested. Has a more attractive dividend, but the payout ratio is higher.

As a growth manager, she is not a huge fan of banks. Because of their recent acquisition, the feeling is pretty much that dividend increases are over. It was a fairly expensive acquisition, and analysts were lukewarm about it. If you are looking for dividend growth, this is not the place.

It is a good buy at these levels. It has a robust dividend and has lagged other bank peers. This is because investors are waiting for management’s vision for the bank to unfold. It has been acquisitive and will continue to do so for growth.

His weighting in Canadian banks is currently around 10%, making him underweight compared to the index. He likes the yield. On a valuation basis, this is the cheapest. Their recent US acquisition is in the very early stages, which is part of what the market is waiting for. This would be a Buy, but he wouldn’t plow significant capital into it.

This has lagged the other banks recently, because of their acquisition of PrivateBankcorp in the US, which they paid a big price for. They are trying to establish more of a footprint in the US, so longer-term this should pay off for them. Management has concentrated on de-risking and shoring up the balance sheet by retrenching and focusing on core competencies. Dividend yield of 4.91%.

They recently increased their dividend. It would be pretty gutsy to do so if you had all the dirty laundry the caller mentioned. Even if their earnings did not take everything into account, then it could just mean another dividend increase. They appear to him as one of the stronger banks out there.

He owns a lot of Canadian bank stocks. They are a great source of current income as well as some growth. This bank has been on a nice roll by increasing the dividend quarter after quarter after quarter. With their recent acquisition he doesn’t think dividend growth is going to continue. However, a 5% dividend yield is pretty good compared to bonds. One of his favourite bank stocks.

They made a big acquisition in the US and the stock price has languished since then. The market was surprised by the size of the acquisition. The market is worried that they took a bigger bite than they anticipated. The stock price has come down, but they have done a good job of integrating acquisitions in the past. This is probably a good place to own this bank.

This has not been his favourite bank. Canadian banks have gone through a difficult market period, simply because there has been significant Shorting of them in New York. However, those Shorts haven’t got a clue about how the Canadian banking system works. This is a good long term hold. The dividend is okay and he thinks you will see increased dividends. (See Top Picks.)

Has done relatively better this year than some of the others. Feels they have less growth potential because they are Canadian domestically oriented. She is more positive on the US economy. The Short interest on the Canadian banks has been relatively high, and that is really coming from American investors that are very negative on the Canadian economy.

You have a fine uptrend until it got interrupted. Now you are looking at a very big range. Until it is broken, we are likely stuck within it. It is important to have a longer time horizon and don’t make it a huge portion of you portfolio.