Toronto-Dominion Bank (TD.TO)

Strongest capital position of all the big 6 banks. Their interest in Schwab can be monetized. Want to expand their already large US presence. Loan growth should pick up. Will benefit when regulatory restrictions are lifted. Should continue to increase dividends. Yield is 3.61%. (Analysts’ price target is $93.28)

His personal favourite, a forever hold. Great presence in retail. Great footprint into the US. A close second to RY as the most conservative. Expects positive earnings surprises.

Rate hikes are good for Canadian banks. He expects dividend growth sometime this year, especially TD which is very well-capitalized. They have billions of dollars, enough cash to buy back shares, raise the dividend a lot and/or make acquisitions, like a bank in the U.S. southeast. He also likes their deal with Ameritrade; this business combination will yield $2 billion in synergies. In Canada, their domestic personal and commercial banking business is #2 or #3. Shares are at all-time highs, but you can still buy this and other Canadian banks, which have been the cornerstones of his portfolios. Canadian banks make all-time highs time and time and time again.

Looking at US banks, their read through is very good. Loan loss reversals, investment banking is doing well. TD will benefit from this as well. All Canadian banks look good here. It is trading at a premium right now. Likes BMO more.

Canadian banks as a group are attractive right now. The entire space should fare well. US banks valuations have come up, whereas Canadian ones are still undervalued. He also likes RY and TD.

(A Top Pick Jan 08/20, Up 4%) Has developed a great US franchise that will continue to grow. Selling Ameritrade business to Schwab was a good move that will grow their retail business. TD is well-capitalized like all Canadian banks. Real estate is an ongoing worry in Canada, but TD has a diversified loan book and income stream--not just loaning money, but credit cards, asset management and investment banking. TD is not pricey at current levels, so you can buy it. Pays a great dividend. Banks will improve their cost structure, particularly in the back office. There may be an inflection point later where customers bank online and don't go to actual branches.

Canadian banks are under huge pressure with rates so low. Possible that rates go negative next year, and that's a tax on fixed income. One of Canada's strongest banks, along with Royal. They'll figure out a way to make money, no matter what the environment.