Investing in Canadian Banks

[striv2love]

I would like to put in 10-20K into financials, and was thinking maybe equal split among these the top 5 Canadian banks?

I have a small position in Bank of Montreal, and it has been doing quite well (about 50% up since I bought it about 8 months ago).

The other Canadian banks have also performed quite well, and still seem attractive, and all have good dividends ranging from 3 to almost 5%.

https://dividendearner.com/best-canadian-bank-stocks/

https://wealthawesome.com/best-canadian-bank-stocks/

https://finviz.com/screener.ashx?v=...versified,sec_financial&ft=2&o=-dividendyield

Any recommendations?

 

[resjudicata]

@striv2love I’ve got $530,000 since after the covid drop/recovery in BNS, TD and RY... the divs are amazing and the cap appreciation so far is fantastic.

Buy the Canadian banks, safe and in a tax sheltered environment... life hold

 

[corbco]

@striv2love If you have a Dodge minivan, a Honda minivan, a Toyota minivan, and a Ford minivan, would you say you have a diversified transportation fleet?

Try to go with one or two "best in class". No need to scattershot the entire sector.

 

[resjudicata]

@corbco I agree with the sentiment but not for Canadian banks. RBC imho is the best without question, but all of the banks really are top class. Nothing wrong with putting some of your money in ZEB.TO, though I'd recommend going heavy on RBC based off their EPS, quality of business and their systemic importance worldwide.

 

[alexandrah2]

@striv2love CIBC has been an absolute beast for me in the 2 years I've owned it. Up almost 40% and that includes it dropping to the high 60s last year. Currently at $140 (cad).

 

[coltonclark]

@striv2love Why Canadian banks? Why not jpm?

It has actually outperformed the s&p for a while now.

Edit: BMO has actually done quite well as well, also beating the s&p by more than jpm since 2000 or so.

 

[ana123456]

@coltonclark Canadian Banks are a protected oligopoly. They are generally very fiscally conservative and considered the bluest of blue chip investments in Canada. I would rather take my savings and drop it into the stock of a Canadian bank and get a 4%+ dividend than sink it into a savings account earning 0.25% (especially with the Canadian dividend tax credit available to Canadians).

Thats me though, not everyone has the stomach for and cushion for such risk (though I think its a very minimal risk its still non-zero).

 

[resjudicata]

@coltonclark I would be careful with large banks right now using a lot of treasury bonds as collateral as feds have repoed $500b to them. Seems to be a liquidity issue with banks right now. Seen major spike drops in JP and others

 

[coltonclark]

@resjudicata No.

 

[resjudicata]

@coltonclark Explain? Why do you think it’s safe to buy into banks rn

 

[resjudicata]

Lol dude are you serious? Their books are filled with investment grade loans paying them steady income. They unloaded all their dogshit and tightened their books after 2008.

They have loss provisions at exponential multiples of historical levels. Non of them are paying any interest expense.

Their SGA and employment cost are lower than ever.

Banks may be, in my estimation, 50% or more responsible for their being no monetary velocity since 2008 (ie. No inflation).

Legislation drove it, but their reserves are at impossibly high levels historically speaking.

What about banks concerns you in any way?

Editing for links:

Reserves

Velocity of Money

 

[siamus2k14]

@coltonclark I'm also wondering the same question. Why choose RY over JPM?

 

[fromsalemwithlove]

@striv2love This is very safe. TD, Royal banks CD etf. The yields are many times higher than high dividend bonds. The A share does not always get dividend. But Toronto Exchange allows preferred....

Dividend 15 Split Corp. is a Canada-based mutual fund that invests in a portfolio of dividend yielding common shares, including 15 Canadian companies. The Fund offers two types of shares: Preferred Shares.

 

[tryharder]

@striv2love I hold TD and RY. If you’re in the US I recommend holding Canadian companies in a retirement account to avoid the excise tax you’d incur on Canadian company dividends in a taxable account.

 

[moremarylessmartha]

@tryharder You can buy them directly on the NYSE though.

 

[curiousgirl98]

@striv2love I've been in Scotiabank for 5 years, and think they are a great low volatility, descent dividend payer. That's had a pretty strong growth run.

 

[marylp911]

@striv2love You might want to check out the Canadian tax laws before you invest

 

[sharon09]

@marylp911 Just buy them on the NYSE, they are all there

 

[b%E1%BA%A1ch4506]

@striv2love Dividend paying stocks (financials especially) are not safer than the broad market. Over the long term nothing overperforms forever and you will be paying more taxes on the higher yields vs growth.

 

[knittedspoons]

@b%E1%BA%A1ch4506 Over the long term 4% of stocks are responsible for 90% of the market gains. In Canada it is very clear the government favors banks.