Toronto-Dominion Bank (TD.TO)

(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.

Have a great franchise in Canada obviously, but developing a great franchise in the US as well. Have made some very astute acquisitions over the years. Trading at 10X next year’s earnings and 1.8X Book. Dividend yield of 3.77%.

Likes all the Canadian banks. Likes their involvement in the US. Avoided the bullet and went on to make another major acquisition. Feels there is a dividend increase coming. 3.68% yield. Target of $95-$100 in 12 months.

Hit a 52-week high today. 3.6% dividend yield. Thinks that you can look at a solid 10% total return over the next 12 months.

Preferred shares for a retired person? When you want income and protection, he thinks preferred shares are pretty strong. This bank is a great brand with a very strong balance sheet.

His weighting in banks is 20%, which is his maximum. Currently his favourite is Bank of Nova Scotia (BNS-T) but he is not selling any of his banks. (See Top Picks.)

Preferreds paying 6.25%? Dividends come every month, but are going down in value. How come? If this was a perpetual preferred, then even though 6.25% looks attractive, he would suspect that the mechanical movements in the market and capital flow over the last several months have put pressure on this.

Nothing wrong with it. Great assets in Canada and the US. The one he likes to own in Canada but focuses on the US right now. Prefers BAC-N.

Has been a very good bank in the last few months although, in the last few weeks, because of the problems out in Alberta and in the Toronto area, its insurance division announced they were going to take a write-down this quarter. The reason this bank has been doing so well, compared to other Canadian banks, is because it is more of a US bank now than it is Canadian. Likes the outlook but prefers to own US banks directly.

Buy Jan 90 Calls at $1.60. (This is for January 2014.) The stock came off today because they are expecting some losses in their insurance division, mainly because of the flooding in Calgary. The stock is off about $1.65 today. This gives you the right to buy the shares at $90. You could actually do this with any of the Canadian banks.

Often split over $70 but it hasn’t happened yet. Stick with it because it is in an uptrend. May not want to buy it at these levels. Buy at the breakout point. $85

Would you still buy this today or would you buy a U.S. Bank such as J.P. Morgan (JPM-N) or Wells Fargo (WFC-N)? US banks, price to book, are slightly cheaper so if you believe strongly in a US housing and economic recovery, you should buy a U.S. Bank. He still likes this one, which is his favourite.