Toronto-Dominion Bank (TD.TO)

Great exposure to the US. Not widely appreciated, there are a vast number of US chequing account holders that don’t have mortgages with them so allows for cross selling. They invest heavily in technology to keep costs under control.

He owns 4 banks. Good US franchise. It should be in a portfolio.

Will likely split. Ranks at the bottom of his top ranking. Have done very well and he thinks they will continue to do so. Our housing market did not blow up. Earnings from banking and from capital market sides are rising.

Canadian Bank but becoming more and more a US banks. Operations in the US have been doing well. He prefers US banks, but if you like to invest just in Canada, then buy TD.

(A Top Pick Oct 29/12. Up 26.32%.) Bought April $80 Calls at $4.75. This is a strong bank and is going to do really well. He would just hang onto these. You have until January 2015 so there is lots of time. He expects the stock will be over $100, which would give you a double on the original position.

This stands out as one of those banks that is diversified. It has earnings in Canada and has significant earning power in the US and is going to do quite well. Also brought in the Aeroplan on its credit card which will add a significant amount to them.

Floating-Rate Preferred, Series T (TD.PR.T-T). Given what the market has been doing recently, he wanted to be a bit more defensive so has started to slowly build up his floating side. This is at a predetermined spread of 160 basis points over the government of Canada T-Bill. As the rates start to rise, this will go up. Paying about 2.60%-2.65%, which is more of a money market type. It is a dividend, you are getting, not interest so it would be about 3.5% of a money market type of paper.

Arguably Canada’s best managed and safest bank but, because of that, it is also one of the slowest growing because ROE is not as much as any of the others. He would choose to invest in other banks over this one, such as Bank of Montréal (BMO-T), Bank of Nova Scotia (BNS-T), CIBC (CM-T) as well as Royal Bank (RY-T), which has the highest ROE, but you are also paying the most as compared to the other 2.

(Top Pick Mar 11 /13, Up 9.38%) US footprint is a big part of his reason for holding this. They also do a very good job with their customer experience which they have replicated in the US also. A well managed company with great dividend policy.

What bank would you buy and would you do it now or later? Canadian banks in general are pretty reasonable value right now. His favourite would be Toronto Dominion (TD-T). Has been pretty successful in expanding into the US market. He sees this as a pretty superior bank to some of the regional banks in the US so there is lots of room for them to make progress there.

This is about 50% US now. They were a bit early on acquisitions and in the right areas of Florida, New England, New York and New Jersey. Raised the dividend this past quarter. Put their insurance debacle behind them and marketed it really well. Thinks that in the next quarter they are going to split the stock 2 for 1. Yield of 3.76%. One-year target of $100 ($50).

(A Top Pick September 5/12. Up 16.33%.) Continues to like this. Have made acquisitions in the US in the past and are now reaping the benefits because of stronger loan growth. Have a lot larger deposit base relative to what their loan book is in the US. Sees Canadian banks, as a group, growing at 6% to 10% along with their dividends.

(Market Call Minute.) A little bit rich right now and he would add to it at around $87-$88.

With banks in general, it is hard to go wrong. They are so big, so massive and almost like an arm of government. This bank has had the most success in the US. Feels the mortgage market is still growing.

Toronto Dominion (TD-T) is up 90%, Bank of Nova Scotia (BNS-T) is up 54%, Canadian Imperial (CM-T) is up 14% and Bank of Montréal (BMO-T) is up 13% in the last 9 years. Why would TD and BNS rise that much more than the others? The 2 or 3 key points about these 2 banks is that they are the ones that are growing or expected to grow their dividends the quickest. TD is expected to grow by 10% per year over the next several years and Scotia is expected to grow by 9%-10%. Feels that TD is quite overbought at this point.