Royal Bank (RY.TO)

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.

This is the bank with his best 1 and 3 year return targets. 12-13% for this year.

Series AJ Preferred resets. 3%. Thinks it will be called in 2019 and not reset again. It no longer counts toward tier 1 capital.

Likes the earnings report that they came out with last Friday. A global leader. They’ve laid out a game plan where 50% of the business should be domestic and 50% should be global. Also, 50% should be in wealth management and 50% in other traditional banking areas. That sets a model for other banks. Yield of 3.7%.

Came out today with good numbers, but a bit of slowing on the Canadian retail business. Also, wealth management was a little bit light relative to expectations, which is an area that you want to see grow consistently over time. Also, there was a little slowing on the lending side.

Does a larger market capitalization over a smaller bank slow its growth? Generally that is correct. The larger the company, the harder it is to generate growth, but in banking it is not necessarily a huge detriment. In fact, people feel more comfortable with larger financial institutions. She likes this banks mix of business better than other banks.