Toronto-Dominion Bank (TD.TO)

It is safer because of the US exposure. They have not acted like a 50% American bank. They probably will raise the dividend in the next quarter. (Analysts’ Target: $70.00).

Move some National Bank (NA-T) funds over to this bank? If you want to make a switch, TD makes more sense than National. It has more US exposure. However, he would rather you buy a US bank, such as Citigroup (C-N), J.P. Morgan (JPM-N) or Bank of America (BAC-N).

On a valuation basis, all Canadian banks are trading similar to one another, so don’t let the share price dictate good or bad, cheap or expensive. This is trading at 11X, similar to most of the banks. It has done an excellent job in their retail banking and has the formula down, better than any other Canadian bank. Dividend yield of 3.6%.

This has its wealth component which he likes. It has been a great rewarder to shareholders over time.

The only Canadian bank he owns. He likes that he doesn’t have to buy a US bank because of their US operations. They are retail in nature, which reduces the volatility of capital market activities. Fee income is a big focus for them. The only downside threat that could be out there are auto loans. Because they are in the US, they tend to do better than the American banks, which tend to be very fractured. They don’t have the systems in place like Canadian banks do.

He likes this company if rates rise in the US. They have opportunities in the US because it is a fractured industry. Retail oriented, so there is less volatility and safer, which accounts for a higher dividend over time, compared to the rest of the Canadian banks. Dividend yield of 3.7%. (Analysts’ price target is $71.)

Canadian banks look great right now. Chart shows this had a longer term of consolidation from 2014 to 2016 and then broke out. After topping out this year, all the banks looked like they are basing and trying to break out. Probably not a bad time to be buying the banks.

The rate increase will have less of an impact on them than the others. CM-T or NA-T would be two of the top to benefit from the recent rate increase.

This stock has finally is showing early signs of recovering after being in a downward trend. It is in a trading range and late last week reached above it. It is starting to look interesting, but on a seasonal basis it is strong October to December of each year. It is a bit too early to play the seasonal trade right now.

A serious long-term buy for people who speculate on things for serious stocks.

Canada has a banking oligopoly. This is the 2^nd biggest bank in the country. Has a very strong, dominant domestic franchise and a well positioned asset management franchise. They have a large and growing presence in the US. With interest rates hikes that are occurring in the US, the likelihood of them improving their net interest margins, and ultimately their profitability, is very good. Dividend yield of 3.7%. (Analysts’ price target is $71.)

This closed at $65.31, and his model price is $76, a 16% upside. Pays a nice yield of 3.67%.

He normally wouldn’t look at banks because their ROE is lower than the 20% cut-off that he likes to see. He owns this bank and the Royal Bank (RY-T). The banks will give you your 10%-15% long-term rate of return.

US banks have rallied, benefiting from the stress test, and are able to return more capital to shareholders, but that has never been a problem for this bank, which is why they have not benefited. However, deregulation as it is happening is going to benefit this bank also. As well, this bank has its great Canadian franchise and having a good balance between the US and Canada is a good place to be. 3.7% dividend yield.

If he were going to buy a bank, it would probably be this. He likes the retail focus, and it has far less exposure to Canadian mortgage market, and a lot less exposure than some of the other banks to energy lending. A good, steady, bread-and-butter business. With their exposure to the US, it should give them exposure to rising interest rates and improve their net interest margins.