Royal Bank (RY.TO)

All Canadian banks are cheap now. There are concerns about Canadian debt levels effecting housing, but there are steps taken to cool that down. Valuations are very low. RY has a lot of deposits and good U.S. prescence, many levers to pull. TD, RY and BMO is how he'd rank the banks and you can buy them all now at these levels.

Rising rates are generally good for the banks. If you are a medium to long term investor, you could be comfortable buying any of the Canadian banks. He does like Royal. They have made some strategic investments into the US market. You will get dividend yield and some growth potential.

Yes, the Canadian banks have dropped in the past month, given rising interest rate fears, but he would hold on for the long-term. Compared to a decade ago, the banks are well-capitalized. Yes, fintech could disrupt the banking industry, but the banks are aggressive in exploring this area. RY's dividend is safe. RY's ROE may slip a bit, but it's still generous. If anything, buy instead of selling RY and Canadian banks.

The Canadian banks are value creators. RY is the granddaddy of them all. Ignore the short-term pullbacks and consider 5 years or more. RY will eventually rise above $150. The banks always grow their dividends around 5-7% annually. RY is the leading capital markets business and commercial and personal bank in Canada as well as wealth management. They have a good U.S. business. If you bought this recently before the correction, just hold on.

Great bank, though he owns more of TD, because of its U.S. exposure. RY is extremely well-managed. You can't go wrong owning it. But if RY is too big a part of your portfolio, sell some of it and buy a U.S. bank like JPM. Note: Canadian dividends pay better dividends and benefit from Canada's dividend tax credit, whereas you're taxed more on U.S. banks. He sees more upside with American banks, but check with your accountant and advisor about the taxes first. Otherwise, but another Canadian bank.

(Past Top Pick, Oct. 30, 2017, Up 5%) Sold it to buy BMO. RY has hit resistance. But you can't go wrong starting in Canadian banks by buying RY. Plus, we're entering seasonality for Canadian banks.

(Past Top Pick, Nov. 30, 2017, Up 5%) The TSX is up only 1% YTD, which shines a light on the importance of income stocks. He still likes RY. They put up good numbers recently, like growing earnings by 13%. Their wealth management sector is on fire. U.S. operations are doing well. They're investing into tech--in digital platforms--and taking a long-term view. This is good.

They like the bank at this level. It has only gone up about 1.5% year to date. Earnings have come in better than expected, reporting an increase of 11 or 12% in the last quarter. They’ve raised their dividend. About 25% of their revenues come from the US and growth from services to high net worth individuals is coming through. She expects dividends to increase proportionately to earnings, about 10% this year. Yield 3.8%. (Analysts’ price target is $111.75)

(A Top Pick October 23/17 Up 6%) The Canadian banking sector has gone sideways for much of the year. He still recommends holding it. The Canadian sector remains an oligopoly.