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Royal Bank of Canada (RY $234.38)
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Toronto-Dominion Bank (The) (TD $129.71)
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Bank of Nova Scotia (The) (BNS $102.09)
Q: I am a buy-and-hold total return value investor. I have a concentrated portfolio of eleven stocks. I don't worry about asset diversification. I hold FFH and BN in the financial space right now, but I'm considering selling BN and replacing it with a Canadian bank (not an ETF). What do you think of that plan? Which Canadian bank would you think would best fit my strategy? Could you please list three banks, in order of preference?
Thanks.
Thanks.
5i Research Answer:
A switch from BN to banks could make sense if investors believe banks are attractive in the near term due to a pickup in earnings, or potential multiple expansion to reflect improvement in fundamentals, or simply because investors seek stable income going forward, etc. In other words, if investors believe banks as a sector offer better near-term prospective returns or for other personal reasons.
Otherwise, for investors that seek total returns over the long term, we think BN remains the most attractive compounder in the sector. If investors still decide to go for a switch, we think these banks are decent candidates for long-term holdings, in order: TD, RY, and BNS.