Toronto-Dominion Bank

TORONTO-DOMINION BANK $55 (Toronto symbol TD; Conservative Growth and Income Portfolios, Finance sector; Shares outstanding: 1.9 billion; Market cap: $104.5 billion; Price-to-sales ratio: 3.3; Dividend yield: 4.0%; TSINetwork Rating: Above Average; www.td.com) earned $2.4 billion, or $1.18 a share, in its fiscal 2016 first quarter, which ended January 31, 2016. That’s up 5.8% from $2.1 billion, or $1.12, a year earlier. Earnings for its Canadian banks (62% of the total) rose 4.4%, thanks to strong loan demand and gains from the wealthmanagement and insurance businesses. Earnings from U.S. banking (31%) jumped 20.2%. That’s largely because the low Canadian dollar enhanced its profits. However, earnings from wholesale banking (7%) fell 16.1%. Lower stock trading volumes offset higher advisory fees on mergers and acquisitions. Revenue rose 13.1%, to $8.6 billion from $7.6 billion. However, TD set aside $642 million to cover potential future loan losses, up 77.3% from $362 million. That’s mainly because it recently acquired the U.S. credit card portfolio of department store Nordstrom’s (New York symbol JWN). As well, low oil prices could hurt the ability of energy producers to repay their loans. These borrowers represent less than 1% of TD’s overall loan portfolio....

ING Group NV (ADR), $11.70, symbol ING on New York (ADRs outstanding: 3.9 billion; Market cap: $44.2 billion; www.ing.com), is a global financial institution that offers banking, insurance and asset management to approximately 75 million clients in Europe, the U.S., Latin America, Asia and Australia. The bank is in the final stages of selling off its insurance businesses. This is part of a broad restructuring effort that ING began after it received a Dutch government bailout during the 2008 financial crisis. Last year, ING sold its remaining shares in U.S. insurer Voya Financial. It still has a stake of around 14% in Dutch insurer NN Group NV. ING’s outlook is positive, especially in its core Dutch market. The Dutch economy is improving following a lengthy crisis in 2012 and 2013—the housing market is up and disposable incomes are rising....

ISHARES CANADIAN SELECT DIVIDEND INDEX ETF $20.37 (Toronto symbol XDV; buy or sell through brokers; ca.ishares.com) holds 30 of the highestyielding 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 5.0%. Its top holdings are CIBC, 9.7%; Bank of Montreal, 7.4%; Royal Bank, 6.8%; BCE, 6.5%; Bank of Nova Scotia, 5.6%; Rogers Communications, 5.2%; Laurentian Bank of Canada, 5.0%; Manitoba Telecom, 5.0%; TD Bank, 4.7%; IGM Financial, 4.4%; and TransCanada Corp., 4.4%. The ETF holds 58.6% of its assets in financial stocks. The top Canadian finance stocks have sound prospects, but if you invest in this ETF, be sure to adjust the rest of your portfolio so it won’t be overly concentrated in the financial sector....

ISHARES S&P/TSX 60 INDEX ETF $18.65 (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, which consists of the 60 largest, most heavily traded stocks on the exchange. The ETF’s MER is just 0.18% of assets, and the units yield 3.2%. 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, 8.7%; TD Bank, 8.0%; Bank of Nova Scotia, 5.6%; CN Railway, 4.8%; BCE, 4.0%; Bank of Montreal, 3.9%; Suncor Energy, 3.8%; Valeant Pharmaceuticals, 3.5%; Enbridge Inc., 3.3%; and Manulife Financial Corp., 3.1%....

We feel that investors will profit the most by holding a well-balanced portfolio of high-quality stocks. However, if you don’t want to build a portfolio, or you want to supplement your individual stock holdings, then ETFs can provide a great alternative. The main factors we use to evaluate ETFs are the stocks they hold, the diversification of their holdings across the five economic sectors and the fees (MERs) they charge. In general, investors holding mainly ETFs would want, say, 60% in Canadian ETFs and 20% to 30% in U.S. ETFs....

CANADIAN IMPERIAL BANK OF COMMERCE $87 (Toronto symbol CM; Conservative Growth and Income Portfolios, Finance sector; Shares outstanding: 397.3 million; Market cap: $34.6 billion; Price-to-sales ratio: 2.7; Dividend yield: 5.3%; TSINetwork Rating: Above Average; www.cibc.com) is Canada’s fifth-largest bank, with total assets of $463.3 billion. CIBC has built up its Canadian banking operations in the past few years, and this business now supplies 62% of its earnings. It gets a further 25% from its capital markets division, which provides brokerage and underwriting services in Canada, the U.S. and other countries. The remaining 13% comes from its wealth management division, which has $304.8 billion in assets under administration and management.

Steady revenue and earnings gains

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Exchange traded funds (ETFs) are set up to mirror the performance of a stock market index or sub-index. They hold a more or less fixed selection of securities that represent the holdings that go into the calculation of the index or sub-index. ETFs trade on stock exchanges, just like stocks. That’s different from mutual funds, which you can only buy at the end of the day at a price that reflects the fund’s value at the close of trading. Prices of ETFs are quoted in newspaper stock tables and online. You pay brokerage commissions to buy and sell them, but their low management fees give them a cost advantage over most mutual funds....

TORONTO-DOMINION BANK $54 (Toronto symbol TD; Conservative Growth and Income Portfolios, Finance sector; Shares outstanding: 1.9 billion; Market cap: $102.6 billion; Price-to-sales ratio: 3.3; Dividend yield: 3.8%; TSINetwork Rating: Above Average; www.td.com) earned $8.75 billion, or $4.61 a share, in its 2015 fiscal year, which ended October 31, 2015. That’s up 7.7% from $8.1 billion, or $4.27 a share, in 2014. Revenue rose 4.9%, to $31.4 billion from $30.0 billion. Low interest rates continue to spur loan demand at TD’s retail banking operations in Canada and the U.S. Higher trading volumes and underwriting fees also contributed to the gains. Due to the higher loan volumes, the bank’s loan-loss provisions rose 8.1%, to $1.7 billion from $1.6 billion....

TD BANK $54.16 (Toronto symbol TD; Shares outstanding: 1.9 billion; Market cap: $100.3 billion; TSINetwork Rating: Above Average; Dividend yield: 3.8%; www.td.com) is seeing slowing loan demand, especially in Western Canada, where the oil-price drop has forced producers to postpone projects and lay off workers. At the same time, low interest rates are cutting the interest income TD earns on its loans, and more of its customers are banking online instead of in bank branches. All of these factors have prompted the bank to look for ways to cut costs and boost efficiency at its Canadian and U.S. operations. That will probably lead to several hundred job cuts....

CANADIAN PACIFIC RAILWAY LTD., $202.17, Toronto symbol CP, reported lower freight volumes in the latest quarter, mainly due to falling prices for oil and other commodities, but the railway still reported better-than-expected results. In the three months ended September 30, 2015, CP earned $427 million, up 6.8% from $400 million a year earlier. Per-share profits jumped 16.5%, to $2.69 from $2.31, on fewer shares outstanding. These results exclude unusual items, such as gains on asset sales. On that basis, the latest earnings beat the consensus estimate of $2.67. Revenue gained 2.3%, to $1.71 billion from $1.67 billion, also beating the consensus forecast of $1.69 billion....