Q: If you didn't own any banks but are realizing they are getting to attractive price points that have div yields only seen one other time in the last 25 years (covid), and you were considering TD or RY. TD looks attractive because of its bigger pullback due to US M&A mishaps, while RY has not pulled back nearly as much and has been stable. TD having the bigger div but RY outperforming TD by a pretty big margin over every time frame. Which would you chose today, TD for valuation or RY for long term outperformance? This is for a long term hold. Thx
5i Research Answer:
We would be comfortable with any of the large Canadian banks, but between TD and RY today, we would side with TD due to its larger pullback amid concerns of high short interest on the name, and its potential to stage a larger comeback than RY due to this. Both names have performed very similarly over the years, and they are both fundamentally strong. It is a tough decision, and we would be comfortable with either name, but we would give TD the slight edge today.