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Royal Bank of Canada (RY)
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Toronto-Dominion Bank (The) (TD)
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Bank of Nova Scotia (The) (BNS)
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Hamilton Canadian Financials Yield Maximizer ETF (HMAX)
Q: As a divided investor would you be a buyer or seller of the Canadian banks today.
5i Research Answer:
Most banks are now trading at attractive multiples compared to historical averages (lowest in the last ten years). Although there could be short-term headwinds of more loan write-offs due to rising rates making borrowers default, we think Canadian banks' balance sheets in general are strong, and this is just a normal cycle of the banking industry.
We think banks offer good value for long-term investors at these prices. They are not risk free, but dividend support should kick in, and they certainly seemed priced for a recession already. When sentiment is so negative investors can often do well going the other way, but patience will be required here.