National Bank of Canada (NA.TO)

Feels the energy concerns have probably peaked as to what it can do to the banks. All the banks are still cheap relative to their 5 year, this one included. They all have really good dividend growth. Prefers Bank of Nova Scotia (BNS-T) and Royal (RY-T) as they have the most upside right now. (See Top Picks.)

National Bank (NA-T) or Power Financial (PWF-T)? Power Financial has a good record of increasing dividends, so that would be the one he would prefer.

This is the one that has a little more work to do. You are still paying a reasonable price for Canadian banks. Hopefully they are through the worst of the oil write-downs. He owns all the banks.

Canadian Banks have 2 periods of seasonal strength. From October through to December, from January-February to April and even into the end of May. Between now and about August, it is kind of a weak spot for the Canadian banks. The chart shows it is just consolidating here, and we’ll have to see what the next move is going to do. There is resistance at about $46, the April high. If it can’t overcome that April high, and if it charts a lower high, that could imply a head and shoulders pattern, with the neck line all the way down to about $41.

BNS-T vs. NA-T. Totally different. BNS-T is a global bank leaning toward the Caribbean. NA-T is not the same thing. This environment is constructive for developed markets with energy prices staying stable. He prefers more North American exposure so chooses NA-T. He would prefer RY-T to either of these.

We have overhead supply. It is a head and shoulder formation which is bearish. We are failing again at the shoulder line.

They are bringing themselves up to US standards. Banks do well from January to Mid-April. They are stable earners and dividend payers. You have to be careful in that the recent breakout was oil-based. It is not his favourite sector in the market. Don’t step out at this point.

The banks have had a stunning move. This one is the poster child for energy. He thinks the banks will come down a bit in the short term. This is a good one to own.

He doesn’t hold this bank because they were pretty aggressive in building its portfolio of loans in Alberta. Concerned that they probably have too much in the way of oil/gas debt. You are probably better to stick with the other banks.

National Bank (NA-T) or Bank of Nova Scotia (BNS-T) for a long-term dividends and growth? Using his ranking system, he would favour Bank of Nova Scotia. However, looking at the longer-term on both, this bank has probably outperformed. It depends on where you think the economy is going. If you think emerging markets in Latin America are going to improve, Scotia will probably have a little bit more growth.

Which bank would you buy for growth and dividends? If you were to look at the ratios, dividend yield, Price to earnings and Price to book, this bank comes out as the most favourable investment at this time. The rap has always been 1) too much business in Québec, and 2) lately too much of its earnings have come from wealth management and proprietary trading. Both of those are uncertain areas. He likes this bank, and the metrics are very attractive. (See Top Picks.)

A slightly higher energy exposure than other banks and capital ratios are a little skinnier. These are headwinds, but this has a 5% dividend, and their payout ratio is at 51%. Dividend is still safe, and he models that they are going to grow the dividend at about 7% annually over the next couple of years. Would probably be selling Calls here to give you a second stream of income. If it backs up a couple of dollars, then look to write Puts to gain entry into it. Thinks you can do really well with this strategy for the next couple of years.

It is weaker than its peers. It broke below the 200 day average. This is the typical ABC correction. The low now should hold. It won’t be one of the stronger stocks, but there is no harm done. The sell-off is over.

He allocates only 7% to Canadian banks. 5.2% yield. 16.5% return on equity. 9 times forward price to earnings. On a financial metrics perspective it is attractive on all fronts. It makes sense to be a long term investor with this. They don’t have much exposure to the energy space.

He likes the bigger banks and their wealth management arms. In a recovery it may outperform because it underperformed recently. They have exposure to Western Canada and were later into it, so we will see how all that plays out. He prefers CWB-T more, of the smaller banks.