royal bank

Cutting your taxes through capital gains is a very smart financial planning strategy.

Dear Reader: Most successful investors describe themselves as buy-and-hold investors. But for many, their strategy is more like buy-and-hold-till-I-get-bored, or until I see or hear about something better on TV or the Internet.

Instead, rather than ―buy and hold‖, we prefer a “buy and watch closely” strategy....

Exchange-traded funds (ETFs) give you a low-cost, flexible alternative to mutual funds. Here are five ETFs we recommend and one to sell.

ISHARES S&P/TSX 60 INDEX ETF $20.09 (Toronto symbol XIU; buy or sell through brokers; ca.ishares.com) is a good low-fee way to buy the top stocks on the TSX. The units are made up of stocks that represent the S&P/TSX 60 Index—the 60 largest, most heavily traded stocks on the exchange. Expenses are just 0.18% of assets, and it yields 2.9%. The index mostly consists of high-quality companies. However, it must ensure that all sectors are represented, so it holds a few we wouldn’t include. The index’s top holdings are Royal Bank, 8.6%; TD Bank, 7.7%; Bank of Nova Scotia, 5.9%; CN Railway, 4.6%; Suncor Energy, 4.4%; Bank of Montreal, 3.9%; BCE, 3.8%; Enbridge, 3.6%; Canadian Natural Resources, 3.1%; CIBC, 3.0%; and Brookfield Asset Management, 2.8%....

ISHARES CANADIAN SELECT DIVIDEND INDEX ETF $21.88 (Toronto symbol XDV; buy or sell through brokers; ca.ishares.com) holds 30 of the highestyield Canadian stocks. Its selections are based on dividend growth, yield and payout ratio. The weight of any one stock is limited to 10% of the ETF’s assets. The fund’s MER is 0.55%, and it yields 4.3%. iShares Canadian Select Dividend’s MER is higher than, say, the iShares S&P/TSX 60 Index ETF because it’s more actively managed. Most market indexes are set up so that the stocks in the index are those with the highest market capitalization and also the most widely traded. However, the iShares Canadian Select Dividend Index ETF aims to zero in on the 30 stocks that it sees as having the highest dividend yields—and yet also the best propects for dividend growth and sustainability. The fund’s top holdings are CIBC, 8.4%; Agrium, 7.4%; Bank of Montreal, 6.0%; Royal Bank, 5.8%; Bank of Nova Scotia, 5.0%; BCE, 4.5%; IGM Financial, 4.1%; Laurentian Bank of Canada, 4.1%; National Bank, 4.0%; TransCanada Corp., 4.0%; TD Bank, 3.5%; and Emera, 3.1%....

ISHARES MSCI CANADA INDEX FUND $24.16 (New York symbol EWC; buy or sell through brokers; ca.ishares.com) holds the stocks in the Morgan Stanley Capital International Canada Index. The fund has a 0.48% MER and yields 2.4%. The index’s top holdings are Royal Bank, 7.9%; TD Bank, 7.1%; Bank of Nova Scotia, 5.4%; CN Railway, 4.2%; Suncor Energy, 4.0%; Bank of Montreal, 3.6%; Enbridge, 3.3%; Canadian Natural Resources, 2.8%; and CIBC, 2.8%. If you want to own a Canadian index fund, you should buy the iShares S&P/TSX 60 Index ETF (see previous page). You’ll pay about a third of the management fees....

These six ETFs hold mostly blue chip, widely traded stocks on Canadian and U.S. exchanges. All of them mirror, or track, the performance of major stock market indexes. That’s opposed to narrower indexes focused on, say, resources or themes such as solar power or biotech. Of course, you pay brokerage commissions to buy and sell these ETFs. But their low management fees give them a cost advantage over most mutual funds. Below we update our advice on all six—five buys and one we don’t recommend....

ROYAL BANK OF CANADA $73 (www.rbc.com) recently completed its $7.1-billion acquisition of Los Angeles-based City National Bank. This business added $53 million to its latest quarterly profits. Even so, Royal’s overall earnings fell 0.4%, to $2.45 billion from $2.46 billion a year earlier; earnings per share fell 4.2%, to $1.58 from $1.65, on more shares outstanding....

CANADIAN IMPERIAL BANK OF COMMERCE $96 (www.cibc.com) earned $2.55 a share in the quarter ended January 31, 2016. That’s up 8.1% from $2.36 a year earlier. Strong gains at the bank’s main personal and business banking operations offset weaker earnings from wealth management and securities trading. CIBC also increased its dividend by 2.6%; the new annual rate of $4.72 a share yields 4.9%. Buy. ROYAL BANK OF CANADA $73 (www.rbc.com) recently completed its $7.1-billion acquisition of Los Angeles-based City National Bank. This business added $53 million to its latest quarterly profits. Even so, Royal’s overall earnings fell 0.4%, to $2.45 billion from $2.46 billion a year earlier; earnings per share fell 4.2%, to $1.58 from $1.65, on more shares outstanding. These declines are mainly due to weaker results from its insurance and securities trading operations. Even so, Royal boosted its dividend by 2.5%; the new annual rate of $3.24 a share yields 4.4%. Buy. THOMSON REUTERS INC. $50 (www.thomsonreuters.com) plans to sell its intellectual property and science information businesses. It would probably apply the expected proceeds of $3 billion—equal to 8% of its $38.2-billion market cap—on share repurchases. Buy....

Royal Bank of Canada lifts earnings with sale of home and auto insurance unit, purchase of boutique U.S lender