National Bank of Canada (NA.TO)

Focused in Québec which has been good in the downturn, but not so good lately because the Québec economy is somewhat lacking the rest of the country. Has done very well in managing costs and has been selectively outside of Québec. Relatively cheap compared to Royal (RY-T) and Toronto Dominion (TD-T) so he sees nothing wrong with this bank. They pay a good dividend. If you’re not looking for super returns, this is a good one to own.

Has been a very good performer and a good track record with its dividend. Needs to do a little bit more to broaden out its platform. Really too centered in central Canada. Prefers others. (See Top Picks.)

Not so regional anymore as they keep making wealth management acquisitions. Have a big interest in Fiera Capital (FSZ-T) which is also wealth management. Made a smart acquisition of TD Waterhouse institutional, all the back office stuff, which gives them access to $35 billion worth of client assets, which they can sell ancillary services to. Have one of the lowest valuations at 9X earnings and one of the highest returns on equity. He knows they are going to increase the dividend this year, maybe even twice. Yield of 4.38%.

This is a Québec centric bank. Well-run and has done very well. Her preference is for banks that are more geographically diversified in terms of business mix as well as geography. (See Top Picks.)

With today’s stocks going down 3%-4%, this is a good buying opportunity. We are in a cyclical recovery that has 3-4 years left in it. Canadian banks have good dividend yields and good growth potential. They are reasonably valued. If you want total return potential, less yield but more capital appreciation, he would urge you to look at US or European banks. Staying at home in Canada with a domestic concentration is great when things in other parts of the world are going bad. (See Top Picks.)

Canadian banks represent great businesses and give you great exposure as the economy gets better. However, if he were given a choice of buying Canadian banks versus US banks, he would be more likely to focus on US regional banks. They are likely to see more rapid dividend growth over the next 2 years because they have rebuilt their capital levels. Revenue growth is in the very early stages after been stagnant for some time,

(Market Call Minute.) This has more exposure, regionally, which he wouldn’t like. Would rather have one of the bigger players such as Toronto Dominion (TD-T) or Royal (RY-T).

Good bank and has done very well. Increased dividends. Does not have as much opportunity to grow outside of Canada as some of the others. Geographically much more exposed to Québec and the economy there. On banks, she is looking for growth outside of Canada because the Canadian economy may lag. Their capital markets division is slightly higher than the others, which tends to be more volatile. (See Top Picks.)

If the multiple is the same as the majors he would prefer the majors because they don’t have the Quebec concentration and in fact he would prefer something more international. It is a fine hold, but he has other preferences.

Expending more outside of Québec. Recently bought a division from Toronto Dominion (TD-T). Likes that they are focused on certain issues, rather than trying to be all things to all people. Feels mortgage origination is going to be down in Canada in 2014, and probably more so in Québec, so feels that there will be a better entry point for all of the banks.

(Market Call Minute) Plays in the smaller caps but this is his number one rated large cap bank.

Thinks you will get a split. He owns three others. It is one of two domestic banks. He owns others for their international exposure. There are some lifecos that look good too.

(Top Pick Jan 14/13, Up 18.83%) Feels really good and this is a good entry point. Cheapest Canadian bank and has the best growth potential going forward. They want to get big in the wealth management business.

Have some very interesting business lines. Just bought Toronto Dominion’s (TD-T) Institutional Services’ Business (TDWIS) and they have the majority of that space, which he expects will be a very strong growth area in the next couple of years. Also, they are very well capitalized, loan ratios are very good and they have been raising their dividends a couple of times each year.

Switch to Manulife (MFC-T)? Macro picture for both companies is very positive, so you are picking between Good and Good. This bank is the cheapest of the Canadian banks. Well-run. Given the 2, she would continue to hold because it is cheap and the fundamentals are great. The asset management side is growing.