Royal Bank (RY.TO)

Has done well, but pulled back a little, which makes it an opportunity. Is the largest Canadian bank, very diversified with strong wealth management, so somewhere defensive. Pays a 3% dividend, not the highest, but still good. They bought HSBC a few years ago. It trades at a premium to the group, but boasts a higher ROE.

(Note the shortish timeframe.)  HSBC acquisition and its global capabilities are starting to bear fruit. Looking to expand wealth management in Middle East and China, thereby improving its positioning.

He'll get into banks again when prices are better. If the problems of GSY spread up the affluence chain, banks will have problems. Housing market is sloppy. Our economy is being bailed out by gold and oil prices. 

This is the class act you can buy and be fine over the long term.

Revenues went up last quarter, but so did costs. Needs better loan growth to hit ROE targets. Shines in asset management and capital markets. As market stabilizes, lots of opportunity in IPOs and M&A.

Always the gold standard if you're looking for a Canadian bank.

Disclosure:  His old employer.

Outlook is favourable. He owns BMO, RY, and TD. All 3 had good earnings, with TD probably the best. But the other two were also strong.

Tight, well-regulated oligopoly. A need, not a want. Diversified by geography and line of business. Good line of sight through the cycle to high, single-digit rate of dividend growth. He's overweight the banks.

Core holding, phenomenal name across all business segments. Outperformed the group. All that's reflected in the price, not cheap here. Interest rate cuts will support the consumer (lending, housing). Buy on weakness if you can get it.

Resolution on CUSMA will improve appetite to spend by consumers and businesses.

Is the top bank in Canada. Have been doing well in the US with investment banking.  Is up 31% the past year. Is the most expensive among Canadian banks but deserves that premium, but the sector valuation is reasonabe.

Her owns both. He doesn't wait for pullbacks. A year ago, he favoured TD because of the penalty imposed on them.  RY is trading at a full multiple, while TD is at a slight discount. He slightly favours TD. Also consider the other Canadian banks.

It is the highest weight in their bank holdings and is well positioned for growth. They bought HSBC Canada and can cross sell to clients. Its payout ratio is very reasonable at 45% of earnings. At a recent conference, bank CEO's expressed confidence in the outlook. The interest rate environment is more friendly now with payments more manageable than a couple of years ago. Banks continue to raise their dividends.

Right now, trend looks to be intact. You can have 6-9 month periods, even in a long-term trend, where not much happens. With banks you just collect dividends during those times, but they do add to your total return.

Splitting doesn't make the company bigger, but more accessible and the current price of $238 is still accessible to most investors. Splitting tends to happen at $1,000. Long-term, RY could be the best bank in the world. It's super-consistent, very well-run and not expensive. This is a buy, hold and forget about it.

Extremely well managed. Likes it, but don't buy more. 25-year-high valuation, and peak earnings expectations are built in. Released reserves, so not too much juice there. Capital is mostly optimized. 

From here, you're basically earning your dividend yield plus a little bit of EPS compounding. That could get you 5-8% return over several years -- reasonable, but also optimistic. Very well diversified, but you can't outrun the Canadian consumer when it comes  to the Canadian banks. To be wildly optimistic on the banks, you have to be wildly optimistic on home prices in major centres, and he's not.

The 800-pound gorilla. His firm's bet that this will be the best performer. In a league of its own. Consistent outperformer. He'd stick with this one.