Royal Bank (RY.TO)

Do you think this and other banks are in for a significant tumble, and should they be sold now? Canadians historically have very, very large exposure to debt. It would have to be really, really bad for a significant period of time for the banks to have to cut their dividends. Their payout ratios are fairly reasonable. They continue to be well capitalized from a global perspective. The biggest risk that Canadian banks have is to car loans and small businesses, particularly out West.

Just acquired City National out of California for $5.4 billion. Seemed a little expensive to him, but in wealth management you are paying a premium price. He likes this name long-term. Great franchise and you are getting a 4% dividend with a 6%-7% dividend growth over the next little while. Canadian banks are fairly valued at this point. A lot of the questions surrounding banks over the next little while will be, how far do energy prices fall and how does that affect the housing market.

Has some US business, which is a benefit to them. This has pulled back an awful lot here, and discounted a lot of the capital markets side. The next couple of quarters won’t be great in that area, but will be a year from now. Dividend yield of 3.89%.

This is really a wealth management bank. For Canadian banks as a whole, it is the future growth in mortgages. Basically the banks have grown at a rate that was double the GDP for a long time, predicated upon a strong Canadian housing market and increased accumulation by Canadians. These 2 things are definitely going to slow. The recent pullback is a good entry point.

There are a lot of worries on banks right now. The energy sector and the debt associated with it has created some concern. Relative to utilities, pipelines and telcos, banks are very cheap on an earnings basis. Relative to other banks globally, they might be a little bit expensive. He doesn’t think any of the Canadian banks, even in a bad housing market, oil market or both, will be cutting their dividends. At a 3.5%-4% dividend yield, they are in line with other dividend payers, and thinks they are going to be alright, so holding positions in a bank is going to be a good thing to do.

This bank or US banks instead? In the last year or so, he has employed the strategy of going into US banks. This is because he has a better view of the US economy and US consumer than he does of the Canadian consumer. Believes the Canadian economy underperforms the US economy by 50 to 75 basis points of economic activity. This bank has a very good franchise, and you buy this for its diversity across 3 businesses, the retail bank, the wealth management division and capital markets. Strong Canadian base with a strong US presence. It should do well.

(A Top Pick Jan 7/14. Up 12.19%.) Likes the group and this is one of the 3 that she favours within the group. Likes their diversification across all their businesses. It tends to trade at a premium to the group, but it has a high ROE, and with the pullback it is trading at about 11.5-12 times earnings.

He is not a fan of the big 5. He only owns BNS-T because it has the least exposure in Canada. He worries loan growth will stall, capital markets are not the place to be and worries about exposure to energy companies. He worries about exposure to individuals in areas where there is a lot of energy business. The layoffs are just starting to happen.

You can hold Canadian banks for a long period of time. They have done very well and have great yields. Dividends get increased fairly constantly. Doesn’t see any reason to run from these because they are going to pick back up again after this little downturn is over.

Likes this bank and the outlook over the next year. This is the largest bank in Canada, and probably the most diversified in terms of capital markets, retail banking, insurance, etc. They are a major player in all of the areas that they participate in. Despite that they trade at a bit of a premium to the rest of the group, he wouldn’t hesitate to invest in this.

There is a lot of negativity surrounding the world generally, because of what is happening in oil. When you have changes like that, you have to decide what this means longer-term. He thinks it is very bullish, and the Canadian banks will benefit in a very major way from the potential scenario that he sees. Yield of 3.71%.

(A Top Pick Jan 7/14. Up 16.87%.) She still likes this. Feels the pullback the banks have had, post their Q4 earnings, was a bit overdone. Growth is slower, but still grew at 6%-7% year-over-year, and this is the kind of growth she expects next year with the banks. If they hold their current multiple, you are going to get that 6%-7% capital appreciation and their yield of about 4%. Exposure to energy, as a percentage of their loan book, is pretty low.

The biggest bank and very reflective of the ZEB-T ETF. You can't argue with the upward trend. Any time it gets back near the trendline, you just Buy it.

A great long-term hold. Had a great track record. You are looking at a good 5% plus annual growth rate. Yield of about 3%-4%. You are going to have a long-term average return of 10%, which is pretty good for a major institution like this.

Most Canadian banks are trading at fair value. Technically, this one is sitting right at the 200 day moving average. Not a bad time to be buying banks at this level. Trading at a 200 day moving average with a dividend that is reliable, predictable and growing, this is a good, long term name to hold.