Investment Q&A

Q: Canadian banks have had a strong run in the past month. Do you expect them to give some of this back in the near term?

Q: I invest in companies that have a track record of growing dividends. A chunk of my portfolio is invested in Canadian bank stocks which up to this year had a nice record of increasing dividends. In 2020 TD and RY did increase early in the year - but Covid brought a halt to increases from BMO and BNS. When do you think the banks will begin to think about increases - is 2021 too early and does OFSI (or whatever they are called) have a say and will they disallow.
Thanks

Q: Hi!
Stocks have increased a lot recently and most of the above are well off their lows with stocks like BEP and BIP almost reaching their high of the year. Would you feel comfortable entering new money into the above names for income/growth or wait for a pullback? I know timing the market is next to impossible but do you see this rising market as sustainable and if one waits will the opportunity to enter still at reasonable prices be missed? Also, what are your thoughts on RDVY. It was not listed as a choice on the drop down list.
Thank you!

Q: Good day,
I have built my daughter's RRSP with your wise direction. She is up 15 to 25% on BAM;EMA;FTS;L;OTEX;RY; BEP and RBF 1030.(My choice) Wonderful. Thank you. We are down in descending order on ENB;CSH;BCE and MFC.

Overweight in Utilities and Financials but okay with that.

Would you add to the latter group? Add any new ones.

Looking forward to Peter on BBN Tuesday.

Long term 25 years+. Many thanks!

Q: I have owned TD and BNS for a number of years in my RRSP account - I am looking at either adding more to BNS or buying RY as a new addition. Can you suggest what would be best at this time ?
Thanks

Q: Purely in terms of dividend sustainability could you please rank TD, RY, BNS, NA, CM and BMO and briefly why? Thanks.

Q: I am trying to build a TFSA asset mix and have looked at the top companies in a number of ETFs. I already have investments in Oil & Gas. I would appreciate any suggestions for companies that I can add that would be stable and not high risk as I am 70. I have been mostly looking at dividends and growth companies of Canadian companies due to the tax implications of a TFSA. Thank you.

Q: 7:18 AM 10/7/2020
I am having a lot of difficulty trying to calculate or find Compound Annual Growth Rates [CAGR] of share prices without [and with] dividends reinvested. Do you know opf a reliable source?
Sources tend to differ a lot perhaps because of not properly accounting for share price stock splits.
I would appreciate it if you could give me CAGRs without and with dividends reinvested for
CNR, CP, TIH, RBA, TRI, BAM.A, RY, CSU.
Thank you......... Paul K.

Q: Dear 5i team,
NA, CM and RY have seen recovery to an encouraging extent.
BNS, TD and BMO much less so.

I do bear in mind that not all banks were/are uniformly exposed to risks precipitated by the virus; those that needed to increase reserves against losses have done so I believe. I’ve not sourced reports indicating any bank is not prudently shored up with loss provisions.

Would it be too soon to start a monthly purchase of BNS, TD, and/or BMO - small amounts, say $1k?
If it is too soon, what are you looking to hear, read about, or see happen that would tell you buying can begin?

Thank you so much!

Q: A respected analyst stated: DO NOT BUY THE BANKS!!!
Here are his reasons:
- Not only are they facing pressure from a flat yield curve but every aspect of their business is being disrupted by digital-first competitors.
- FinTech companies (both public and private) are disrupting every single one of the revenue channels at the banks.
- There isn't a single reason to own bank stocks other than the dividends however I’d argue if their businesses decline as much as I think they will those dividends might not be safe.
- There are better industries to find dividends where the companies are growing earnings and increasing their dividends. Personally I don’t see any of the banks increasing their earnings for a long time especially if these VC backed FinTech companies continue to crush them.
- If you want exposure to the financial industry I’d suggest going with the digital payment companies: $V $MA $PYPL $SQ

What are your thoughts re: only focus on fintech and digital payment companies in your portfolio?
I note that your top pick for banks in your income portfolio is BNS.TO, which you constantly recommend as it appears "undervalued", however BNS.TO has made 0% capital appreciation over 5 years. Is it time to switch to fintech?

Q: My daughter is selling BNS for a tax loss. For a replacement would you favor a US bank like JPM at this time or another Canadian bank like TD or RY? Her other financials are BAM and GSY.

Q: What is the current stock price per book value of the above 3 banks? The

Q: Hello,
I have been holding Laurentien Bank for a few years thinking it was 'cheap' as it was trading below book value. It's done terribly should I hold/sell any recommendations on an alternative holding for the long term.

Q: Hello guys,

I was hoping you could help to interpret the reports from Canada's banks this past week.
On the face of it, earnings did great compared to expectations. However they largely reported these gains based on outsized returns from their capital markets divisions. I am trying to make sense of what this means in the short and long term.
Firstly, capital markets are comparatively small parts of their businesses (at RY it is normally 20% of income). Is it also safe to say that this is a reflection of both turmoil and government stimulation, and I wonder if governments will be remiss to see its money land there. A d is it repeatable.
Second, with low rates on the horizon increasingly, the Fed and other central banks appear torn about the inflation theses that they have and what to do next. For banks I understand this means margin erosion as well as potentially demand destruction from customers.

Any thoughts on progress of the sector and possible ripples to the economy are greatly appreciated.

Thanks,

Peter

Q: Hi,
In a previous question you responded:
" We would rank the banks: TD, RY, BNS"
Should I sell my BNS and swap for TD or RY? I've held it for years and basically just received the dividends.
Thanks

Q: I have about 29.3% of my portfolio in financials. Is this too much? I'm above water on all except BNS with FSZ about even if I include the dividend. Which would you suggest dropping if I'm too heavy in this area & in what order? Thanks,as always for your wonderful guidance
Dave

Q: In a straight-up comparison of BMO (Bank of Montreal) versus RY (Royal Bank), for a long-term position (non-registered account), which one would you buy, and why? (I've owned BMO for >25 years, never owned Royal, but because of ongoing portfolio adjustments, I'm in a position where I want to own one of these two banks, for the long-term. Note: I already have long-standing positions in TD Bank and National Bank, in my Canadian portfolio, so another aspect to my question is which one better complements my existing Canadian bank holdings. In my situation, there are no particular tax implications for buying BMO vs RY.)

Q: I have been watching volatility within a narrow range for Royal Bank and Canopy Growth (WEED)for months now. I have $96 RY options for January 21 and same date for WEED $30 options. Are you optimistic about either or both increasing by 20% or more in the next six months?

Q: top 3 american, top 3 canadian, banks to invest in ?, and a reasonable projection and why, or do you not recommend banks at this time?

thanks

Q: Do you feel there is a need to go into the US to get additional financial exposure, into something like GS or JPM? Or would RY be sufficiently diversified given its size, and international diversification.