Royal Bank (RY.TO)

Hands-down is the best Canadian bank.

Trades at a premium. More growth for 2024 than the others. Benefit of HSBC transaction. Great wealth builder over time, but there are better opportunities in the market right now. He'd step in at 5-10% lower.

"Baby with bathwater." Net interest margin compression, credit provisions picking up. Credit cycles follow interest cycles like night follows day. Nothing likely to derail the dividend, verging on 5% and growing at 7-8%. HSBC acquisition will cement leading position further in Canadian banking.

He's no trader, but a long-term investor. Perhaps the best of the Canadian banks, which are hated now because bonds are safer and pay high yields. This will change. Eventually, people will see that banks offer growth and pay dividends. 

Banks have performed poorly this year. Great dividend yield. Fears of recession are real, but won't be hurt too badly in mortgage market. Not expecting a big increase in non-performing loans. Loan books are in great shape, as regulations result in bigger risks shifting to non-bank lenders.

Still likes Canadian banks, even with the pullback. Positioned well defensively. Great dividends that aren't going anywhere, even as the stock price fluctuates. A preference for her in the space, based on valuation and potential upside. Over the long run, more consistent and less volatile. 

Canada's top bank, leading in digital adoption like AI to drive growth.  Pays a 4.5% dividend, growing 7% compounded over the past decade. He forecasts a double-digit return in the coming decade. RY has outperformed the TSX in the last 19 of 25 years.

(Analysts’ price target is $138.52)

Good time to purchase shares with price down.
Recently beat analyst expectations on quarterly report.
Able to grow loan book last 1-2 years despite interest rate hikes.
Gaining market share in GIC market.
HSBC acquisition hoping to close in 2024 - good for business.
Will benefit from inflow of immigration into Canada. 

Least volatile of them all. Spits out its dividend, stock's always going up. Good time to buy. Not hugely risky, but make sure it stays above $118 or start reducing. Downside potential is $108-109, so size your position according to that.

Owns shares in Canadian Dividend fund.
Cream of the crop in Canadian banks.
Trading at higher valuation.
Not concerned about interest rates (will charge higher fees if rates go up).
Strong franchise value.
Growing Canadian population will fuel business. 

Trevor Rose’s Insights - Trevor’s most-liked answers from 5i Research

RY has been one of the fastest-growing Canadian banks, and it has survived several recessions in the past. Although there is the potential for a recession to arise as a result of high interest rates, we would be very comfortable with holding any of the large Canadian banks for the long-term. While there are concerns about a potential recession, a lot of these fears have been priced into the Canadian banks, as we have seen their valuations contract as a result of weakening capital markets and reduced lending. 

The large Canadian banks will generally grow with the economy and the capital markets. As the Canadian real estate market grows and consumers and businesses take on additional debt to fund real estate, property, investments, etc., the large banks will benefit and see their top and bottom lines grow. Most of the Canadian banks have also been expanding into other geographies, which has helped to stimulate growth. 
Unlock Premium - Try 5i Free

Likes Canadian banks as a group, well capitalized. She favours TD and RY, with exposure to US growth. Attractive yields. She doesn't think we're going into a deep recession in Canada or the US.

There'll be little disparity among the big banks though CM depends more on Canadian mortgages. Long-term, the big banks will pay you 10-15% returns annually, though they haven't been giving that in recent years. He prefers RY because of its slightly higher ROE and is more diversified.

One of his favourites. Business mix has held up very well. Good investment, 10x earnings, and great dividend yield. But, for new money, TD and BNS have lower valuations. See his Top Picks.

She likes the banking sector. Non-interest expenses rose more than expected less quarter, but pays a dividend over 4%. The HSBC deal will close later this year and benefit RY.