Keep banks a cornerstone of your portfolio

Article Excerpt

The shares of all five of Canada’s major banks have moved up sharply as the economy recovers from last year’s COVID-19 downturn. That’s helping to lift earnings as they take back some of the funds they previously set aside for potential loan defaults and so. Restrictions that prevent federally regulated lenders from raising their dividends and buying back shares remain in effect. However, it’s likely the regulator will relax those rules later this year, particularly as all five banks easily exceed the minimum capitalization requirements. We continue to recommend all investors strive to own two to three of Canada’s banks. While we recommend all of them, TD and Bank of Nova Scotia remain our top choices for your new buying. ROYAL BANK OF CANADA $117 is a buy. Canada’s largest bank (Toronto symbol RY; Conservative Growth and Income Portfolios, Finance sector; Shares outstanding: 1.4 billion; Market cap: $152.6 billion; Price-to-sales ratio: 3.6; Dividend yield: 4.0%; TSINetwork Rating: Above Average; www.rbc.com) set aside $110 million to cover…