Toronto-Dominion Bank (TD.TO)

This has traditionally been his #3 bank, and he is thinking of upping his exposure. They have done a very good job in the US and captured a significant part of the retail market there, as well as in the brokerage business. Trading below its historic P/E ratio and Price to Book ratio. Dividend yield of 4%.

Thinks there is still another wave to come in energy. While this bank doesn’t have as big an exposure as some others, he doesn’t think it has all been factored in just yet. He has been somewhat light on the banks. The one thing this has is a significant exposure to the US.

From August through to the end of the year, banks do quite well. The 2^nd period of seasonal strength generally occurs from February through to April, and then the stock tends to level off. Charts show this has rolled over in the last couple of days because of selling pressures. Support level would be at $52.50. If you are still holding banks, look for something that offers a covered call write strategy.

Wait until after earnings in case low energy prices have trickled down? He likes the banks. Great dividends of around 4% and great opportunities to increase dividends by 5%-7%. Thinks concerns on bad loans due to oil prices is getting a little overdone. They have been setting money aside to deal with bad loans.

He cares most about business risk to the banking sector overall. See his educational segment today. The banks had a great run from January, but he does not like owning banks generally. He does not like TD-T here and is underweight financials as a source of dividends in his dividend fund. He did hold it earlier in the year for a while.

He likes it. But they generate about 50% of revenue in the US and he captures that through US regionals. He would be a buyer otherwise. There is upside and the dividend is safe. He is underweight Canadian banks as a whole.

(A Top Pick April 10/15. Down 0.06%.) Has been adding to this recently because Canadian banks are under this big Shorting position from the US. All the banks look cheap. Yields are up and they keep increasing their dividends. Their big US content should do well. Dividend yield of 4.1%. (See Top Picks.)

(Top Pick Mar 18/15, Down 0.53%) They upped their dividend. They are doing exactly what they promised. There is a significant contraction on the PE ratio. He thinks it is an incredible opportunity. They have the smallest exposure to the oil and gas area and also have the most exposure to the US .

(A Top Pick Feb 23/15. Up 1.39%.) This and its US exposure makes this his favourite bank. 25% of businesses is from the US and exposure to oil and gas in Canada is minimal. Also, thinks the banks are smart enough to know what is going on, and will make a move to acquire the technology they are relying on. Dividend yield of 3.9%.

A good Buy at these levels. All the banks are discounting or have already discounted the oil price decline in Canada. There has been US Shorting on our bank names because of assumed real estate exposure. However, he thinks valuation is attractive on pretty much all of the banks.

TD-T vs. BNS-T. They are different in terms of the business. Both get half of their revenue from outside of Canada. BNS-T has been beaten up more because the Latin American economy is less stable than the US. It is a good entry point if you don’t have exposure to Canadian banks. It will be a 9% return including dividend for 5 years amongst volatility.

An issue he has with Canadian banks is that bad debt on commercial loans has been very, very low, so you could see an uptick in that sort of thing. Has reduced his position in this bank.

Banks have come off 5%-17% from their recent highs, and this is a great buying opportunity. You are getting them well below market multiples. He prefers using the BMO S&P TSX Equal Weight Bank Index (ZEB-T).

TD Bank (TD-T) and Enbridge (ENB-T) in a TFSA? This is a bet on the Canadian economy. Will the Canadian economy pick up in the next 5 years? Probably. If you have the patience to deal with all the ups and downs, you might be okay. However, over the next 12 months or so, he is not so positive on the banks.

Banks have been under pressure because of Short selling in the US. We had a reasonable recovery in the latter part of 2015, and then it sold off again. Somehow US Shorts got the idea that our banks have lent a whole lot of money to the oil patch and are going to lose on a whole bunch of loans. This bank has less than 1% of its loans in the energy sector. This bank has a huge US operation. Dividend yield of 3.87%.