Royal Bank (RY.TO)

This doesn’t have the highest growth rate, but has a pretty good one. Bank of Nova Scotia (BNS-T) has the highest at around 8% over the next couple of years. He is modelling 6% for this. Very high capital ratio. One of the catalysts that Royal has is that it has not had restructuring plans like the others, but if they do that, the market will be rewarding it.

Disappointed the street a little in the 2^nd quarter, relative to the other banks, but that is a short-term thing. A very, very well-run bank. There acquisition of City National makes a lot of sense and will add value over time.

Canadian banks have shown their resiliency and good risk management in this energy downturn, and have come out of much better than what people expected. Most of the banks have been taking big restructuring charges lately, consisting mostly of severances that they have been paying. This bank has not done that. They have been taking small charges every quarter, but they left that in their adjusted earnings, which means their earnings quality was quite good. Have reduced their Canadian tellers from 11,000 to 6000. They are the most efficient bank in digitalization, so they have the lowest cost of production. Also, their provisions for energy loans were much higher than what they needed to take, and those provisions could come back into earnings in the next few years.

If a long-term investor and looking for safety, you really can’t go much further off to meet the guidelines you are looking for with Canadian banks. They have a good yield and tend to grow it over time.

(A Top Pick Aug 11/15. Up 9.96%.) She had thought energy exposure would be a real issue, but the banks seem to have worked around that, and hopefully the worst is behind us in regards to energy. The banks are trading at very attractive multiples. This has a yield in excess of 4%. Still a Buy.

As a group, banks are cheap relative to the TSX. We have likely seen the highest water mark in terms of energy fears. This had solid performance in Canadian banking and wealth, and have the best earnings power. They are not going to grow much this year, but over the next couple of years he predicts some pretty good growth. Dividend yield of 4.06%.

This has gone up a lot, but a lot of that focus has been on their recent acquisition of City National of California and the fact that they are re-establishing a broader footprint in the US market again. They have a great retail franchise in Canada. Yields about 4.4%. (See Top Picks)

(A Top Pick March 21/16. Up 4.79%.) Canadian banks are great investments to have, but are slightly overvalued right now in terms of their growth prospects. Longer-term, they will give you that steady dividend growth and low single digit EPS.

Royal Bank (RY-T) or National Bank (NA-T)? This took quite a hit recently because of their acquisition. Not his favourite bank, but it is certainly in a zone that you could comfortably Buy in. He would buy both giving diversification of having a big bank with good dividends, and one that has better growth prospects.

This only has about a 5% exposure to the UK and Europe, which is manageable. They recently took over City National of California, which had a fantastic wealth management business in California and New York State. It is their intention to increase this business as much is possible, and at the same time cross-sell products and services. Dividend yield of 4.31%. (On his 3 top picks, he would not necessarily Buy now, but watch the markets for your entry point.)

Likes this and the Canadian banks. Over the long-term, anybody who has owned Canadian banks has earned significant compound rates of return. They are not expensive and you get a nice dividend growth. Dividend yield of 4.2%.

If Citigroup (C-N) was trading at the same valuation, it would be $90 a share. This is leveraged 22 to 1, while US banks are 12 to 1. Canadian banks, when you look at them worldwide, are the most expensive and the most leveraged. Who knows when this Canadian bubble pops?

Not his favourite, but a good bank. Thinks fintech is going to be a threat going forward. There are lots of small players and very niche, which means they can attack the bigger banks in a number of ways.

Despite the rally the banks have had, this is still attractive relative to historical valuations. There is still too much of a Short interest, and that is a catalyst. Thinks we have seen the high water mark of high energy fears. Unlike the other banks, had a very high quality beat on their Q2. Capital levels, which formerly were a little bit of an issue, have rebounded very briskly. He is seeing 6% EPS over the next couple of years. Dividend yield of 4.18%.

Trading at a very attractive valuation, just over 11X earnings. Price to Book is below 2X, which typically trades above 2X. Consistently generates an ROE in excess of 15%. Acquired City National last year which increases their US exposure. Like all the banks, this has been increasing its dividends. She expects earnings growth in the 5%-7% range. Dividend yield of about 4.2%.