Royal Bank (RY.TO)

Will it ever split? Splitting is not a big factor for him. Over the years, the banks tend to split above $100. There's long been talk of CIBC splitting, but they haven't. He'd rather look at the company fundamentals. RY reports tomorrow.

RY vs. TD He owns more TD, like its American footprint and are getting out of online brokerages which has shrinking margins, so that was a good deal. Both are solid, but we'll see what their earnings are like. RY has 12x forward earnings, while the S&P is 17x--this means a safe margin.

His favorite Canadian bank is RY. However both RY and BMO are investing in technology, which should allow them to continue growing dividends. No problem buying BMO or RY here.

For the long term? Canadian banks are good to hold long-term. RY and TD are his picks in this sector, but it'll be a tougher environment with interest rates staying low in the coming years. He prefers Morgan Stanley because of its growth in wealth management. But banking overall will be tougher to make money for the next 5 years. But you own bank stocks for the dividend and will grow slowly in the coming decade.

Take profits now at $107? Canadian banks are a great space. RY pays nearly 4% and are well-capitalized. Great ROE. Low rates does pressure the banks, but RY has asset management and investment banking, too. Long-term, the banks enjoy a monopoly and will make money. True, there are bumpy periods like now. He also owns TD.

Canadian banks have gotten very cheap now. CIBC has a US presence but it’s mainly in Canada. RBC has more resources with a global presence. He thinks that banks are still a good place to be. Would be buying Royal Bank and TD.