Comparing Canadian Banks / New Buy

Canadian Banks

Comparing Canadian Banks / New Buy

Hey! Today’s post will be a simple comparison of the Canadian banks followed by another purchase. I currently own td, bmo and National bank. They have all done very well for me since I bought them. I wanted to either add to one of my current positions or diversify into another if they seem to be a good value. I’m sure you know about Canada’s banks. They are some of the best banks in the world.

Everyone talks about the big 5. Royal, Bmo, TD, BNS and CIBC. This post will look at the others as well. 8 in total from what I recall. We will also compare National Bank, laurentian bank of Canada as well as Canadian Western Bank.

Im not going to get into what each bank is currently doing or whatnot. I just made a chart comparing their yields, price to earnings ratio as well as how much the stock is below its 52 week high.

Please keep in mind this chart is for today’s date – June 19th 2018. In the future these numbers will be different.

Here it is…

BankPrice / EarningsDividend YieldPercentage off 52 week high
Laurentian Bank of Canada8.05.67%28.48
Canadian Western Bank13.42.78%11.29
Bank of Nova Scotia11.14.31%11.21
Royal Bank of Canada13.13.74%7.87
Canadian Imperial Bank of Commerce10.34.61%7.10
National Bank11.23.90%3.41
Bank of Montreal13.13.75%3.07
Td Bank13.53.52%1.09

As we can see all the banks I currently hold are really not far off their 52 week high. In fact they are all less than 3.5% off their highs. I decided to look into the other banks for more value.

laurentian bank of Canada

When I made my last purchase this month I mentioned how laurentian bank of Canada has been getting pummeled lately and I will be watching them. Clearly they are the best value play, out of every category they are the lowest. There is a reason for some of the pullback. They have been caught with  problematic mortgages or loans. While the ceo claims its been overblown and things are fixed. I dunno, when it comes to Canadian Banks and mortgages that is the hot issue at the moment. Everyone is worried about a housing collapse like the U.S had a while back. The stock price continues to go down, Ill sit this one out currently.

Canadian Western Bank

Next on the list for furthest off their 52 week high is Canadian Western Bank. I really don’t know much about them, other than they have the longest streak of raising their dividend for Canadian Banks. They have boosted their dividend for 26 years! Not bad, unfortunately their yield is though…… And a price to earnings ratio comparable to td? Next!

Bank Of Nova Scotia

Recently I keep stumbling on articles about how solid BNS is for a Canadian Bank. I love how they have expanded to Latin America, and it seems like they keep buying new banks down there all the time. Td has done very well with their US expansion and I think BNS will do the same with down there. The huge population will be a nice tailwind for them. They also currently hold the number 3 spot in each category. Their p/e of 11.1 is the third lowest of the bunch. The yield of 4.31% is nice and juicy, but is also the third highest yield currently. The north of 11% off their 52 week high sold me though!




The Purchase

I decided to get my feet wet with Bank of Nova Scotia before their ex dividend, which is June 29th.

The Bank of Nova Scotia is an international bank and a financial services provider in North America, Latin America, the Caribbean and Central America, and Asia-Pacific. As my portfolio in general is really loaded on the Canadian side of things its fantastic to have this much diversification from a bank!

This is a new position for me. I bought 13 shares at $75.61 per share. For a all in cost of just under $1000 bucks. This buy adds $42.64 in forward dividends to our portfolio.

Conclusion

In today’s market there tends to be a lot of value if you look around. Banks are pretty solid investments and with P/e ratios between 8 and 11 and a half. These are great prices. I was actually surprised to see RBC is down almost 8% from its 52 week high. Its crazy to see all three of my existing positions so close to their 52 week highs. Kinda makes you think of swapping them up! haha.

Anyways what do you think of my newest addition? Based on today’s ratios which one would you buy?

Have a great day!

Cheers.

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34 Responses

  1. Nice article Rob. Exactly what I was looking for actually. The financial market is my lowest sector. Usually tends to be I feel like in most dividend portfolios. Canadian banks seem to probably be the best choice if I were to expand. Although the prices never seem to be discounted so hard to find a good entry point. I know the housing market is crazy in Canada right now which is even higher than the US was when they crashed. Not sure how the banks are positioned for this or how the government will react if there is a crash or huge pullback. Guess we won’t know till or if it happens. TD looks to be pretty good value as you pointed out. But from a personal standpoint, what is your favorites of the 8 listed banks?

    • Rob says:

      hey Daze

      td actually is one of the most expensive at the moment… and is so close to its 52 week high.

      i love td though for its us exposure. something you probably dont need though!

      Since I just bought them bank of nova scotia seems great now. haha!

      cheers daze

  2. Nice post Rob congrats on the buy. I currently own RBC and BMO and I have been thinking about adding a new bank. I really like the diversification that BNS provides.

    • Rob says:

      nice Matt rbc would be a great bank to own. Like i mentioned was surprised it was down 8%.

      The bns diversification is huge for a tfsa investor! haha

      cheers Matt

  3. Christine says:

    Great article, Rob! Looking at BNS myself. Thanks so much.

    • Rob says:

      hey Christine

      glad you enjoyed it, i should do more charts like this when making purchases. It makes it alot easier.

      have a great day

  4. Richard says:

    Wonderful position Rob, I personally was looking into taking a new position with either LB or BNS since they’re both pretty beat up. I recently just went with LB yesterday but will continue to keep a close eye on BNS. Honestly you can’t go wrong with any Canadian banks. Personally I have my wife and I invested in TD, RY, NA and now LB.
    Keep up the great work man! Love your content. I’ve also been researching more into Solar for an additional income stream.

    • Rob says:

      hey Richard.

      That is awesome. If you can do it definitely try. I just wrote up our solar income report for next week. It was a solid income! Makes you enjoy the sun even more.

      Lb was definately tempting that yield is huge. With the upcoming tariffs starting I liked the idea of diversifying outside Canada. Like you said most Canadian banks are solid though.

      keep it up
      cheers!

  5. Leo T. Ly says:

    I own three of the top five Canadian banks in my portfolio. I mostly hold my bank stocks for yields, income and stability. In my opinion, any of th big five bank is worth owning.
    Leo T. Ly recently posted…5 Of The Worst Investment Mistakes That You Need To AvoidMy Profile

  6. May says:

    I also added 200 shared of BNS recently, with a higher price at @75.98. I found we often buy the same stock and you almost always managed to buy it at a lower price. Congrats. I also added 200 shares of RY. I decided to skip LB as I feel regional bank has more risks. Look at Canadian Western Bank, so volatile.

    • Rob says:

      nice May!

      thats is huge! You are throwing down some stacks…

      great buys by you! Royal is anither fantastic bank and 8% off their 52 week high aint bad.

      hold em for long term and you will do alright.

      keep it up, you must be bringing in some serious dividends now!

      cheers

  7. I’m familiar with the Bank of Nova Scotia, but currently not invested in any banks right now. Good luck on the purchase Rob.

  8. Expecting a jump in stock prices? When the interest rates go up … there profits should head up too. Good buy Rob.
    dividendgeek recently posted…Top Canadian Dividend ETFsMy Profile

    • Rob says:

      hey geek

      exactly! i keep debating if i want to increase our total finacial sector overall.

      million dollar question… lol

      cheers man

  9. Nice purchase. I own BNS for a couple of years now and it’s a company that always delivers sound growth numbers and dividend increases. You’ll be happy woning this one, I’m sure. TD and RY are also on my watchlist.

    • Rob says:

      hey Compound

      Thanks! In a rising interest environment those profits should just keep increasing.

      td and ry are great companies as well.

      cheers

  10. Hi Rob, Is there any concern in Canada that the banks are over leveraged to a real estate down turn like the US banks were in 2007? Tom
    Tom @ Dividends Diversify recently posted…Faster than the BearMy Profile

    • Rob says:

      hey Tom

      there definitely is. Cibc is the most exposed to canadian mortgages from what i understand.

      I think the new mortgage rules will create a soft landing as people need to get approved at a higher interest rate than what they are paying.

      There is risk, as canadians have a tonne of debt in general. I hope that gets fixed soon through education.

      Thats why i like td and bns they are well diversified outside of Canada.

      cheers!

  11. Nice buy! I also bought BNS in my wife’s TFSA a few days ago!!

  12. DivHut says:

    I always think of the big 5 in terms of Canadian banks. Thanks for expanding my knowledge of the rest. For now I hold TD, BNS and RY and have been very happy over the years. BNS seems like a good pick up especially with their huge international exposure. It’s been a long time since I bought any of the Canadian banks though. Thanks for sharing..

    • Rob says:

      hey hut!

      thanks, and nice selection you got there.

      curious why has it been that long since buying them? I know you haven’t bought any banks for awhile either way though.

      cheers

  13. DivHut says:

    Other stocks/sectors seem more undervalued to me today than the Canadian banks. I still like them though and plan to hold my three for the foreseeable future.
    DivHut recently posted…Recent Stock Purchase June 2018My Profile

  14. Hey Rob,

    tx for that good overview of Canadian Banks. I always liked Royal Bank of Canada and Bank of Nova Scotia was my favorite. The combination of a yield north of 4% and a P/E of 11 makes them very attractive. Unfortunately the Canadian withholding tax is not easy to swallow for german investors (it’s different for US stocks). That is the only reason I’m not into BNS yet.

    Cheers,
    DividendSolutions

    • Rob says:

      hey solutions

      *The more you know* haha I never knew the tax implications for Germans is more favourable for us stocks.

      Most likely not worth it for you then.

      cheers!

  15. Very ncie wriite-up Rob. I don’t think you can go wrong with BNS or one of the other major banks. Congrats on the addition. I own Canadian Imperial, but can’t argue with the results of your analysis.

    Bert

  16. Thanks for the post. I am also holding BNS, TD, NA, RY, and CM and happy with their performance and dividends hikes.

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