Royal Bank (RY.TO)

(A Top Pick Sept 14/11. Up 25.85%.) Still likes the banks as a group. Reported very strong Canadian retail banking numbers this quarter. Raised their dividends.

Record earnings. Raised dividend. They all did. Likes international and financial services assets. Not as bad results as people thought. Looking ahead, RY is a core holding but he owns 4 of the big 5. Max 20% of bank in portfolio and RY is 5%.

Their wholesale banking should be quite strong on Thursday. High possibility they increase their dividend this week.

Doesn’t expect they will be one of the banks that increase their dividends this quarter. Expect this will be a modestly good quarter for domestic banking and this is one of the dominant forces in Canada. Not a compelling Buy at current levels. 4.2% dividend.

Will probably have a good quarter. Most are treading water. TD looks good. Most if not all will be increasing their dividends. Doesn’t expect RY to be a blockbuster from here – just the dividend increase. Aug 30 numbers come out and div increase could be announced then.

Bank stocks have a very important role, usually right around the end of September when they move significantly higher right through until the end of December. Has a lot to do with expectation for good news to be released at report time, usually around the end of December. Caution: usually in the month of August and into early September bank stocks have a tendency to go down and actually underperform. He could see this one going down to the $50 level, which would be an opportunity to accumulate.

Not his favourite. (See Past Top Picks.)

Not crazy about banks. There is not much dividend growth in the financial sector. There is pressure on them to have more and more capital. This decreases return on capital. They have stated they intend to increase dividend twice per Year. Prefers National because they consistently beat estimates and analysts don’t like it. Investors will reward a company that increases its dividend. Royal is not her favourite.

(A Top Pick Aug 24/11. Up 5.74%.) This would probably be his 4th favourite bank now and would only be a Buy on weakness.