Bank Stocks? Canadian/US??

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frankrom
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Bank Stocks? Canadian/US??

Post by frankrom »

Hi Everyone,

So I was thinking of adding some bank stocks to my portfolio given the fact interest rates will be on the rise. I tend to lean more towards US equities so I figured I'd add US stocks. But maybe it should be Canadian banks??

Anyways... I was wondering if anyone had some perspectives of specific banks... whether it be one of the big Canadian names or something like JP Morgan or Bank of America?

Thanks,

Frank
ockham
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Re: Bank Stocks? Canadian/US??

Post by ockham »

FWIW, here's one perspective.

As for Canadian big banks, there is no Canadian sector more deeply analyzed. Today in Toronto:
BMO down .17%
BNS down .23%
CM up 2.91%
RY down .52%
TD down 2.41%

Tomorrow? next week? next year? I have no idea. My solution: own all five. KISS.

As for US banks, I have no ideas about them either. My solution: own all of them, in this case through their inclusion in total market ETFs, VTI and VXC. Again, KISS.
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Re: Bank Stocks? Canadian/US??

Post by westcoastfella »

For US banks, I had the same conundrum as you have a lot more choices with no clear "best choice", and settled on an ETF for the sector. You can do as ocham suggests with total market coverage. I elected to go with the Vanguard financial sector ETF (VFH), very low mer and broad coverage of holdings. happy so far.
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Re: Bank Stocks? Canadian/US??

Post by frankrom »

Thanks for the perspective guys.

Frank
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Re: Bank Stocks? Canadian/US??

Post by Thegipper »

The Street sentiment seems to favour US banks. The overwhelming favourite seems to be the Bank of America . I own it and Wells Fargo. A lot of commentators like US regionals. There is probably ETFs which target this sector. I have a fair chunk of TD because it has a large US retail banking business.
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Re: Bank Stocks? Canadian/US??

Post by frankrom »

Thanks!

If I pick a Canadian bank I’d pick TD as well. I was aware of their larger US presence.
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Re: Bank Stocks? Canadian/US??

Post by nisser »

I was holding bank of america, JPM and wells fargo. As TheGipper mentioned, the overwhelming favourites among analysts and in the news have been BAC and JPM. Which is why I recently sold both and kept only Wells Fargo :rofl:

For the same reason I'd probably lighten up on the TD exposure as well. Everyone likes them and it's a very crowded trade.
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Re: Bank Stocks? Canadian/US??

Post by bpither »

I'm quite happy owning CDN banks with significant US exposure. TD had big gains in their American investments this past quarter. They have more branches in our southern neighbor than in Canada. With rising dividends I get the prov/fed income tax credits with profit earned here and in the US.

Mind you timing is everything and I've held a collection for a long time and bought when they were cheap. There's one thesis that if you buy the highest yielding CDN bank and switch it every year if the yield drops below another your return for this sector is greater in the long run than in just buying and holding one bank.
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frankrom
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Re: Bank Stocks? Canadian/US??

Post by frankrom »

Well that is an interesting thesis

There surely would be tax implications to consider if there are capital gains
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Re: Bank Stocks? Canadian/US??

Post by Thegipper »

frankrom wrote: 01 Dec 2017 13:54 Well that is an interesting thesis

There surely would be tax implications to consider if there are capital gains
Capital gains is treated the same way whether it's Canadian or USA. Dividends from a US bank are fully taxed as income. If you hold a US bank do it inside an RRSP.
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Re: Bank Stocks? Canadian/US??

Post by shellybear »

I hold as much as possible in the TFSA, biggest holding at this time is DGS, split fund which holds all the Canadian banks. No tax implications there.
After the last offering, the 2nd one within 6 months , DGS dropped to the 7.90 level with the NAV at 7.27, so very safe at this time, so i added a bit , selling some FFN to make room in the TFSA. Distributions still will be paid until NAV drops below 5$ Current yield at 15.15% per annum. I expect a few % capital gain from here as well if the banks, and lifecos continue to hold their own.
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Re: Bank Stocks? Canadian/US??

Post by frankrom »

So I just looked into this DGS.TO Dividend Growth Split Corp... Isn't this too good to be true? What's the risk? whats the catch?

You're telling me that this fund pays 15% dividend and that is it???? People would double their money in 4.8 years....????

Frank
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Re: Bank Stocks? Canadian/US??

Post by Thegipper »

frankrom wrote: 01 Dec 2017 20:05 So I just looked into this DGS.TO Dividend Growth Split Corp... Isn't this too good to be true? What's the risk? whats the catch?

You're telling me that this fund pays 15% dividend and that is it???? People would double their money in 4.8 years....????

Frank
you are probably right . it is to good to be true.
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Re: Bank Stocks? Canadian/US??

Post by shellybear »

If you checked into DGS you would see they have paid monthly .10 distribution every month for the past 10 years.
I began buying 16 months ago, without trading it , you would be up over 50% from that point. I have reduced and bought back in after the offerings.
I am sure there is some risk here, but then again if you know of any totally risk -free divvy payers, let me know....
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Re: Bank Stocks? Canadian/US??

Post by Thegipper »

shellybear wrote: 02 Dec 2017 09:00 If you checked into DGS you would see they have paid monthly .10 distribution every month for the past 10 years.
I began buying 16 months ago, without trading it , you would be up over 50% from that point. I have reduced and bought back in after the offerings.
I am sure there is some risk here, but then again if you know of any totally risk -free divvy payers, let me know....
Was issued at $10 and is trading at the $7 level. Has been as low as $5.5. It holds more then bank stocks. You have to way capital losses against any dividends.
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Re: Bank Stocks? Canadian/US??

Post by BRIAN5000 »

Thegipper wrote: 02 Dec 2017 09:12
shellybear wrote: 02 Dec 2017 09:00 If you checked into DGS you would see they have paid monthly .10 distribution every month for the past 10 years.
I began buying 16 months ago, without trading it , you would be up over 50% from that point. I have reduced and bought back in after the offerings.
I am sure there is some risk here, but then again if you know of any totally risk -free divvy payers, let me know....
Was issued at $10 and is trading at the $7 level. Has been as low as $5.5. It holds more then bank stocks. You have to way capital losses against any dividends.
Yup I'm confused is this just like one of those income funds that pays out more income then it is receiving and the NAV gets lower as a result?
ROC or Dividends more suitable for an unregistered account? Of the 20 stocks they hold I hold 16 of them non-registered.
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Re: Bank Stocks? Canadian/US??

Post by shellybear »

NAV is posted every week, and it does go up and down...In the past 16 months , the NAV has been as low as 6.10 and as high as 7.71. Currently about 7.28 i believe.
DGS was trading around 6$ when i originally bought in. I sold most of it at 8.30 just prior to an offering.
As with any stock, timing is a lot of it. Investing and trading are indeed different animals...
I do agree that from the onset over 10 years ago, the value has dropped..
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An alternative strategy re. my "buying the highest yielding bank stock each year"

Post by bpither »

By chance David Berman writes about an alternative CDN bank buying strategy in a just posted (online) Globe and Mail column - buy the laggard among the Big 5 each year ... behind a paywall. This year BMO?
https://www.theglobeandmail.com/globe-i ... e37173791/
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Re: Bank Stocks? Canadian/US??

Post by AdrianDunn »

The last few days have shown the hidden dangers of many of these split shares that trade for more than NAV. FTN, FFN, DGS, DF, etc all fell by much more than their NAV decline in the last week or two, as investors panicked when they see the steady-dividend stream potentially stopping.

FTN was the most egregious, trading at $10 when the NAV was closer to $7... as the market fell, this thing plummeted 30% to $7, and then had a big bounce to as high as $8.50. From here it is anyone's guess whether people's greed for the dividend yield propels it higher (currently yielding 19%!), or their fear at potentially stopping the dividends sends it back down (NAV currently around $6 / share, they stop paying divs if it hits $5, which would be another 6% or so decline in their holdings).

DGS was hard-hit as well, falling from around $7 to almost $4, before bouncing closer to $5. At current NAV there won't be any divs, but if the market bounces, it will start paying again, and could bounce to the $6 or even $7 range.
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Re: Bank Stocks? Canadian/US??

Post by fireseeker »

AdrianDunn wrote: 12 Oct 2018 11:18 The last few days have shown the hidden dangers of many of these split shares that trade for more than NAV. FTN, FFN, DGS, DF, etc all fell by much more than their NAV decline in the last week or two, as investors panicked when they see the steady-dividend stream potentially stopping.
The prices for capital units of split shares really provide stiff test to the efficient markets theory ...
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Re: Bank Stocks? Canadian/US??

Post by Arby »

AdrianDunn wrote: 12 Oct 2018 11:18 The last few days have shown the hidden dangers of many of these split shares that trade for more than NAV. FTN, FFN, DGS, DF, etc all fell by much more than their NAV decline in the last week or two, as investors panicked when they see the steady-dividend stream potentially stopping.

FTN was the most egregious....;
FTN was being touted by another poster a year ago when it was trading around $10.50. I sure hope s/he was smart enough to dump the shares before this latest downturn.
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Re: Bank Stocks? Canadian/US??

Post by scomac »

Arby wrote: 12 Oct 2018 15:30
AdrianDunn wrote: 12 Oct 2018 11:18 The last few days have shown the hidden dangers of many of these split shares that trade for more than NAV. FTN, FFN, DGS, DF, etc all fell by much more than their NAV decline in the last week or two, as investors panicked when they see the steady-dividend stream potentially stopping.

FTN was the most egregious....;
FTN was being touted by another poster a year ago when it was trading around $10.50. I sure hope s/he was smart enough to dump the shares before this latest downturn.
I remember that poster. Kinda like a drive-by grenade!

The recent market action of capital shares of split share investment corps only further confirms to me that the preferred half is the one that I want to own.
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Re: Bank Stocks? Canadian/US??

Post by thedude »

Back on topic. Some of the Canadian banks are getting close to SCREAMING BUY territory. That assumes no Canadian house market implosion.
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Re: Bank Stocks? Canadian/US??

Post by Shakespeare »

BNS, anyway - CM if you're a fan....
Sic transit gloria mundi. Tuesday is usually worse. - Robert A. Heinlein, Starman Jones
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Re: Bank Stocks? Canadian/US??

Post by BRIAN5000 »

thedude wrote: 12 Oct 2018 21:00 Back on topic. Some of the Canadian banks are getting close to SCREAMING BUY territory. That assumes no Canadian house market implosion.
Not on my spreadsheet they aren't.
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