Royal Bank (RY.TO)

Banks have largely been ignored in terms of their potential for throwing off free cash flow and increasing benefits to shareholders, whether through direct dividends or through international growth. Canadian banks tend to earn 15%-20% domestically on ROE, which throws off a lot of capital that has to be reinvested. It can’t all be reinvested in Canada. This bank has a large advantage there. Dividend yield of 3.9%. (Analysts’ price target is $102.)

(A Top Pick Dec 9/16. Up 40%.) Bought a Long-term call at $4.50. The option is still valid and doesn’t expire until next January.

Chart shows a nice upward trend, with a bump upwards due to the election, and then coming back and testing, and is now on the way up again. Dividend yield of 3.7%. (Analysts price target is $102.)

(A Top Pick June 27/16. Up 29.82%.) One of his 3 favourites along with Bank of Montréal (BMO-T) and Toronto Dominion (TD-T). This is one that you can buy here and hold it happily. (See Top Picks.)

(Market Call Minute) He would buy this for bank exposure as he expects a turn in financials.

(A Top Pick June 17/16. Up 26%.) The catalyst on this was a big Short interest as speculators felt that Canada would really fall apart. He still sees this growing at 4.5% over the next couple of years. It is outperforming its peers on an operating leverage, even without restructuring. Had a very solid print on Q2. This is at a level where you could start adding to it now.

(Top Pick Jun 14/16, Up 26%) One of the top three banks, which she owns. There were hedge funds shorting them based on housing, but it has gone through that. They have a diversified business. It had increased its dividend earlier this year to around 3.8%. Earnings will grow 7-8% this year and dividends should increase.

CIBC (CM-T) or Royal Bank (RY-T)? CIBC is the perennial laggard of the big banks, because historically it has been accident prone. Also, they don’t have the International areas like the others. Royal always has a higher premium. You have to ask if you want more domestic exposure or something with a little more US flavour.

Toronto Dominion (TD-T) or Royal Bank (RY-T) for a long-term buy? He is basically an investor in Toronto Dominion. It got off the mark before anyone else, in terms of getting a position in the US, and thinks that is going to be very important. The Royal was late to the game getting into the US.

He expects the earnings, coming out next week, are going to be pretty good. The notion that they are taking losses on mortgages is ridiculous. He sees no evidence at all that Canadian banks have lost money on real estate. This bank has been making money in private wealth management, and have probably done okay in trading. He would always wait until after earnings before making an initial purchase.

She wanted to choose a bank, to show that she likes the banking sector. This has pulled back from the beginning of the year. All the banks had a great year last year, so she doesn’t expect returns of 25%-26%. They have about 25% exposure to the US, and she thinks the US economy is going to grow faster than the Canadian. Acquired City National which focused on high net individuals and commercial loans. Dividend yield of 3.7%. (Analysts’ price target is $101.)

Owning Canadian bank stocks has never really hurt. In years when stock performance is weak, you tend to get a little bit of a dividend, so you get paid while you wait.

(A Top Pick Dec 9/16. Up 31.11%.) Long term January call. This was just a way to leverage a position, and this is still good till next January.

Sell or hold? The entire Canadian banking sector has moved up. Some of them are a little cheaper than others, but you are not going to get any compelling buy comparable to this bank. If you are a longer-term investor, this is fine.

Toronto Dominion (TD-T) or Royal (RY-T)? The benchmark in Canada. The most diversified and dominant in almost every area they participate in. From a price point of view, he thinks this one is a little more preferable. There is not much to differentiate between the 2 yields. This would be his preferred holding. (See Top Picks.)