Royal Bank (RY.TO)

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.

Her premier choice of the Canadian banks.

He owns no Canadian banks, because he owns only founder-run/owned businesses. Also, returns on invested capital are around only 12-15%, though consistent. TD and RY are the top two banks. TD is up 71% this year. He doesn't know what the shares will do in the future, but look at their PEs and compare it to the historic norm to determine when to buy or add shares. Or just DRIP shares.

The one to own if you want to be a worry-free, passive investor. Capital markets side of banks has been doing phenomenally well. Consumer and mortgage sides haven't been super-strong. Needs lower interest rates and more new mortgages for the next leg higher.

Fantastic global brand, dominant in Canada. Safe, stable. Great investment for a long-term hold. Likes, and has a lot of respect for. His firm doesn't focus on the banks, as they try to add value via other holdings.

EPS of $3.85 beat estimates of $3.54; revenue of $17.2B beat estimates of $16.7B.  Royal Bank of Canada's raised return on equity target of 17% or higher, above consensus, appears achievable given robust capital generation and improving cost efficiency. Nontrading net interest income may grow at a mid-single-digit rate, aided by a shift toward noninterest-bearing deposits. Despite a cautious outlook, RBC expects mid- to high-single-digit commercial-loan growth, while mortgage activity might not improve until 2027. The bank's positive operating leverage goal for fiscal 2026 (6% in 2025), including 1-2% in Canadian banking, will be underpinned by mid-single-digit expense growth and progress in artificial intelligence. Capital markets and wealth management are key drivers. Provisions are likely to stay elevated, with the 2026 impaired provision ratio expected near 2025's 37 bps. We would consider it a good quarter, and the outlook, considering the Canadian economy, better than expected. The stock gets a premium valuation for its size and safety, but we would not really see it as overpriced considering the dividend and growth potential.
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Likes both for the longer term. Owns both. Hesitant to add to either right now, given the move each has had. TD has moved up the most this year. Interestingly, RY has moved up the least. So it's traditional premium versus the other banks has narrowed.

Both released really good earnings. Both beat in capital markets, with focus on wealth management. Instead, she'd look at traditional banking metrics such as PCLs and loan growth.

Better places to deploy capital right now with higher and growing dividends. See her Top Picks.

Banks in general have had a great year so far. BOC has cut rates, so the spread is good between lower deposit rates and higher mortgage rates. 

One concern for banks is if mortgage renewals come in at higher post-Covid rates. What's that going to do to the consumer? Using more take-home pay to pay down debt instead of buying stuff puts downward pressure on the economy.

Next year will be more challenging.

Probably the best-managed bank in Canada, maybe one of the best in the world. All divisions do well, and capital markets have made them a lot of $$ recently (though it can be cyclical). Even if you have capital gains, why sell?  Decent dividend of ~3%.

His firm owns RY, BMO, and TD as cornerstone holdings in its dividend-growers mandate. Canadian banking is a stable, well-regulated oligopoly. Structurally profitable, heavy barriers to entry. Diversified by line of business and by geography. Its fee-based businesses should be very profitable this quarter.

One fly in ointment:  tepid loan growth demand, especially in mortgages, and to a lesser extent in commercial loans. Thinks the worst of credit loss provisions is behind the Canadian banks.

Outlook in Canada is a bit rosier than it was 6 or 12 months ago. He'd continue to hold the banks. Holds this name for almost all clients, and hasn't trimmed that position in many years. In fact, he adds when it sells off. It's his preference to own the highest-quality bank and ride it through the ups and downs, rather than switching among the banks.

Premium valuation for a premium bank with premium assets. Likes the name, but doesn't want to pay over $200. Didn't like many of the bank earnings last quarter because PCLs were released back into earnings once worst-case tariff scenario didn't come to pass. This was premature and too optimistic. Fears our economy might get worse before it gets better.

If you have it in your portfolio, keep it. But she's holding off on buying right now.