royal bank

Characteristics of the best Canadian bank to invest in: dividends, growth, and investment quality

A: Dividend 15 Split Corp., $10.85, symbol DFN on Toronto (Shares outstanding: 34.7 million; Market cap: $376.5 million; www.dividend15.com), is a split-share investment corporation that holds shares of 15 companies: BCE Inc., CI Financial Corporation, Bank of Nova Scotia, Thomson Reuters, National Bank of Canada, TransAlta Corporation, Sun Life Financial, Canadian Imperial Bank of Commerce, TransCanada Corporation, Manulife Financial, TD Bank, Royal Bank of Canada, Bank of Montreal, Telus Corporation and Enbridge.


The company can also invest up to 15% of its portfolio in other stocks.


Dividend 15 Split Corp....

Canadian bank dividends are the top reasons for investing in Canadian banks

Dear safe-money investor:


We’ve selected our top picks for 2017—one stock, one real estate investment trust and one ETF. Each offers a particularly attractive combination of long-term growth prospects and a reasonable price.


We feel that investors will profit the most by holding a well-balanced portfolio of high-quality stocks and REITs—like our first two recommendations below.


If you want to supplement your individual stock holdings, then ETFs, like our third recommendation, provide a sound alternative.


BANK OF NOVA SCOTIA $77.89 (Toronto symbol BNS; Shares outstanding: 1.2 billion; Market cap: $94.0 billion; TSINetwork Rating: Above Average; Dividend yield: 3.8%, www.scotiabank.com) is the third largest of Canada’s five biggest banks.


In the three months ended October 31, 2016, the bank earned $1.9 billion, or $1.58 a share....

These six ETFs hold mostly blue-chip stocks that are widely traded on Canadian and U.S. exchanges. Each ETF mirrors, or tracks, the performance of a major stock market index. That’s different from narrower indexes that focus on resources or themes such as solar power or biotech.


Of course, you pay brokerage commissions to buy and sell these ETFs....

All five of Canada’s big banks have moved up strongly in the past year, as demand for new mortgages and loans remained strong. They have also built up their online and mobile banking operations, which will cut their future operating costs. We like all of them, but TD and Bank of Nova Scotia are our favourites for new buying.


ROYAL BANK OF CANADA $88 (Toronto symbol RY; Conservative Growth and Income Portfolios, Finance sector; Shares outstanding: 1.5 billion; Market cap: $132.0 billion; Price-to-sales ratio: 3.7; Dividend yield: 3.8%; TSINetwork Rating: Above Average; www.rbc.com) paid $5.5 billion U.S....

ENERPLUS CORP. $9.05 (Toronto symbol ERF; Shares outstanding: 240.5 million; Market cap: $2.3 billion; TSINetwork Rating: Speculative; Dividend yield: 1.3%) produces oil and gas from properties in Western Canada—Alberta, Saskatchewan and B.C.—as well as North Dakota and Montana in the western U.S....

ROYAL BANK OF CANADA $83 (Toronto symbol RY; Income Growth Dividend Payer Portfolio, Finance sector; Shares outstanding: 1.5 billion; Market cap: $124.5 billion; Price-to-sales ratio: 3.5; Dividend yield: 4.0%; Dividend Sustainability Rating: Highest; www.rbc.com) is Canada’s largest bank with assets of $1.15 trillion.


Royal recently paid $5.5 billion U.S....

We’ve recommended buying the five top Canadian bank stocks since the 1970s, but not everyone has agreed with that advice

The big banks in Canada face several challenges. These include low interest rates, which cut the amount they earn on new loans, and competition from smaller firms that use new online technologies (called “fintech”) to attract customers.

However, they (including CIBC—see page 91) are cutting their costs and making acquisitions....