Toronto-Dominion Bank (TD.TO)

Loan growth is slowing in Canada. You can only bring interest rates so low to attract loans. TD is 65% exposed to Canada and others are about 80+%. 12 times earnings is about norm. This is probably the one to provide the most dividend growth in the coming years. But he is shifting from Canadian banks to insurance or to US banks.

One of the better banks in Canada. He would diversify, however, with ZWB-T with a covered call overlay and 4.5% yield. This is where he would go with new money coming into the banks, or perhaps wait for a correction, but he has no issues with TD.

We have seen a strong bank reporting cycle and TD was no exception. Canadian retail did very well. Insurance did well. Aeroplan started to contribute. 3.5% yield. Not his favourite, however. Although they expanded rapidly in the US he is not sure return on capital is that high there. Owns RY-T, BNS-T and CM-T.

Likes it. Set up well for healthy growth, and dividend growth, but there is a lot of criticism of slowing US bank revenue. He would buy it, but BNS-T is a little bit better.

Stock is acting really, really well. Their US business is certainly coming along, and their Canadian business is really strong. Feels that some of the US banks could perform a bit better.

Valuation is quite decent at these levels. Good profit growth this year, and he thinks there will be another one as well. Have done a good job of improving and solidifying their US business.

For the next year doesn’t see much upside in Canadian banks. Wait for any kind of pullback in the summer. If you want the dividends, then go for ZWB-T to get more yield.

For banks it is really price to earnings as the metric for value. TD is at premier valuation and is a premier bank as well. All banks have slower mortgage growth and so growth will require more capital. This is a premier franchise that did a fantastic job of entering the US market. It is a good bank, but see his Top Picks today.

One of his core holdings. Canadian banks are stocks that you buy and you hold forever. Trading at around 12.5X this year’s earnings. Before 2008, they typically traded between 12 and 13.5 times earnings. Any time it gets down to 12 times, you Buy. Banks are due for a bit of a breather and he would probably wait until the fall.

(A Top Pick May 30/13. Up 31.83%.) Likes this and the Royal Bank (RY-T). Expects this will continue to do well. Has a great franchise in Canada, and a growing and good franchise in the US. Also, have a strong brand name in the US.

This is one of his core bank stocks. Stock has had a little bounce here. You can sit back and wait. The market will probably drift upwards, but he feels there will be some sort of correction in the next 2 to 3 months, so you can wait for a pull back, maybe to the $51 range This is one he would recommend for anybody’s portfolio.

(Market Call Minute.) New 52-week high. As with the other Canadian banks, you should buy and hold as it will give you decent earnings and dividend growth.

(A Top Pick July 30/13. Up 406.25%.) (Bought Jan 90 Calls at $1.60.) These expired last January.

(A Top Pick May 3/13. Up 33.64%.) Had a 2-for-1 stock split. Banks continue to perform well. Very comfortable that banks are going to continue to deliver reasonable earnings, probably in the 5%-7% range. On top of that you are going to get the dividend, probably in the 3%-3.5% range.

All-time high today. There have been a lot of people that have lost a lot of money trying to Call the top and Short the banks. These are diversified businesses that just keep churning out profits. The resiliency of these businesses is incredible. Certainly we are going to see slowing in loan growth, but today we saw that wealth management did well. Doesn’t think there will be a lot of growth, but you have low single digit growth and low single digit dividends.