Toronto-Dominion Bank (TD.TO)

Try RY for wealth management, or TD for US retail banking. His preferences in the space, and he owns both.

All Canadian banks are down for the year, due to higher interest rates and the contagion from the US regionals earlier this year. TD remains a quality blue-chip bank with a strong balance sheet. Has the biggest deposit base in Canada. Has plenty of branches in the US eastern seaboard. They didn't buy a US bank earlier this year so they have a lot of cash. Trades at a very low single-digit PE and pays over a 5% dividend yield, both rare occurrences. A contrarian call.

(A Top Pick Aug 14/23, Down 9%)

Will continue to own shares. Higher interest rates hard on business. Lots of capital on the balance sheet. Will begin to buy back shares. Has expressed interest in new immigrants to sell products to. 

Mortgage renewals amid rising rates won't hurt banks (they can manage it), but the households making payments. Banks underwrite mortgages well and are conservative. TD was disappointed not to buy First Horizon a few months ago, but they have a first-class problem of holding too much cash, which they can use to buyback shares, raise the dividend or buy another company. Likes TD's positioning and capital markets business.

Likes Canadian bank sector at this time. Most exposure to USA. Excellent business. Strong brand name in Canada. Good management team. Owns shares in business. 

Cheap, trading at 1.4x book and pays a 4.77% dividend yield. Lots of capital after their Horizon deal didn't happen. Are highly diversified with lots of fee income, but well-regulated. It's a tough year for banks, but TD has lots of capital and can buyback shares and make an acquisition.

Has been a top pick of his. The chart is stuck. Play it as a trade, and it pays a 4.8% dividend.

Missed last quarter, as did net interest margins. US under pressure. Increased buybacks. Balance sheet shines over the others. 9.8x with a 5% growth rate. Quality assets, but banks haven't reach their inflection point yet. Look elsewhere.

One of Canada's strongest banks and lacks the problems of, say, BNS. During rising rates, banks are supposed to do well, but this is not happening now. That said, TD is doing relatively well, both in US and Canadian operations. TD and RY are the strongest Canadian banks. They sit on a lot of cash, a good thing to have, and they could buy assets.

All of the interest sensitives have been under pressure the last couple of months with rates rising.

He favours TD. Tightly regulated oligopoly, and a levered play on the growth of the Canadian, and increasingly US, economy. Surplus of excess capital. 10x earnings. Dominant personal and commercial banking franchise. Good-sized banking presence in the US. Shares are at a discount to average. Close to 5% yield, growing at 8% compound over 10 years.

Valuation and yield of SLF are similar to TD. But TD's competitive position in its industry is more advantageous than SLF.

Compared to CM, TD is more of a scale player with a stronger franchise on both sides of the border on its core banking business.

Pleased that the First Horizon deal collapsed. TD pays a great return on invested capital, about 16%. Great staying power in Canada. The US is investigating it for their money-laundering compliance, but it's not a mortal threat and they'll likely be fined. Likes their big retail platform in the US. It's his second-biggest Canadian bank holding.

It has a great U.S. franchise and may do another acquisition there. It trades at 10X earnings and pays a dividend of 5%.
Buy 12  Hold 5  Sell 1

The most retail-focused of the Canadian banks, and they do it very well. Very steady business, great credit controls. Solid dividend, good growth. Core holding.

Fears of recession are real, but won't be hurt too badly in mortgage market. Not expecting a big increase in non-performing loans. Loan books are in great shape, as regulations result in bigger risks shifting to non-bank lenders.

He bought it at the bottom earlier this year, and hopes it can return to $90. He remains positive. If you want only the dividend, you're fine as long as it stays in its range. Will sell around $90 and thinks it will happen. Not a long-term hold unless it stays above $90.