National Bank of Canada (NA.TO)

This has a larger exposure to the energy sector than what you would think, although they are a Québec based bank. 4.9% dividend yield. He would prefer others.

Bank of America (BAC-N) or National Bank (NA-T)? Buy this one. It has a much bigger dividend and trading at much lower multiples. The Cdn$ is cheap here, so why convert unless you have US$. If you do have US$, convert back to Cdn$ and put it into this one. Dividend yield of 4.76%. A well-run bank. (See Top Picks.)

(Top Pick Jul. 29/14, Down 8.18%) He still likes the name, much better in fact. It has a nice dividend.

A bit more of a domestic Canadian bank, but has been very successfully diversifying out West, which is maybe not as big a positive now as it was a year ago. Probably a fairly safe holding. Very generous dividend yield of about 4.7%.

One of the cheapest Canadian banks of the big 6. Has a valuation of 10X this year’s and 9X next year’s earnings. Dividend yield of 4.57%. He sees the dividend growing again in the 4^th quarter. Canadian banks have much more value now than the American banks.

The easiest spot to go for yield would be the banking sector. They are basically paying out 40%-45% of their earnings as dividends, and the yield is probably 50% higher than the 10 year bond yields right now. You’re getting a great rate of return just to sit there. 4.4% dividend yield.

It is a pure Canadian bank and he holds it without any intention of ever selling. They have been returning 12% for many years.

This has been a really solid operator. It has the highest dividend yield in the group and trades at a slight discount to the group. The knock against them is that it is perceived as the one that has most capital markets exposure, and the “Canada only” exposure. Have done an exceptionally good job by being really focused. Consider owning a non-bank financial instead, such as Element Financial (EFN-T).

A little more insulated from outside forces then some of the others. In the recent quarter, they did better than people expected. P&C insurance side was a little bit weaker. Good yield of 4.3%. Sees more capital appreciation in some of the others.

A purely Canadian bank, so he traded his holdings for Bank of Nova Scotia (BNS-T). With the domestic headwinds he saw coming in the Canadian economy, both in the energy area and the consumer, he wanted to diversify away from a purely domestic bank. Dividend yield of 4.6%.

More Quebec-centric and more capital markets-centric. It is not as stable as the others. She actually likes this now due to the stronger US economy and dollar. She does not believe NA-T has much outside of Canada and this is why she does not own it.

(A Top Pick Feb 5/2014. Up 14.86%.) This has held up well. Everybody is concerned about the headlines and the bank exposure to oil, but this is all reflected in the price. Trading at only 9X earnings and getting a 4% dividend.

In general, he would consider this as a “weak buy”. Canadian banks are decent places to be and very popular in people’s portfolios. This one has done a really good job for investors over time. One of the better franchises out there. Ultimately, if oil prices do dip, the perception will be that Canadian banks will get hurt, so this will be a bit weaker.

What should the focus be on when comparing this to the other big 6 of the Canadian banks? Every one of the big 6 banks has a particular flavour to it. This one has a great domestic franchise, but often trades at a discount to the other banks even though its ROE is similar. The best time to own this is when you don’t like what is happening in the rest of the world, but you’re comfortable with what is going on in Canada. If he was tearing the bush, this is one that he would Hold while letting the other ones go. This is because Canada is in a relatively happy place compared to the rest of the world.

They have the biggest exposure to the energy sector and people are waiting for the next couple of quarters to see if there is any hit to earnings.