Bank of Montreal (BMO.TO)

(A Top Pick March 17/15. Down 1.47%.) He is happy with this one.

Canadian Banks are in a conundrum right now. They are not growing the way they should be growing, because parts of their business has dried up. Capital markets activity is not great and the mortgage business is starting to slow down. Some banks are starting to lay people off which is not a good sign as it means they’ve got cost overruns. Just own one of the banks. This one would rank 4^th or 5^th of the top 5, and only because they have always been trying to reinvent themselves.

(A Top Pick Oct 9/15. Down 1.6%.) Canadian banks tend to run up into their earnings. Between Oct 10 and Dec 1, this tends to gain about 5.1% on average. It has been positive in 15 of the past 19 years. During the current period of seasonal strength, it actually gained 6.6%, so it exceeded the average.

It had been a 5^th favourite of the big 5 for some time. It has some US exposure. They bought a bank in the US. He prefers TD-T and his Top Pick today in banks. The Canadian housing bubble is a huge risk. He thinks CM-T will be the best performing when energy turns.

One of three banks she holds. She would not sell here even though banks have not done well. It is the overhang of the impact of oil. She thinks the Economy will slowly improve going into 2016. They increased the dividend slightly with record profits. Earnings will continue to grow although not as much as previously. There is a view that we won’t see the full impact of low energy prices until next year.

Has been buying this recently on the dips. They have a US presence. A relatively conservative bank. You are going to get safe dividends with the banks.

International investors are cool to Canadian banks right now. They are worried about our housing market and exposure to the oil patch. This gives tremendous buying opportunities. This bank is interesting because coming out of the great recession they made a big acquisition in the American Midwest, and that has worked out pretty well for them. Still not on his list because he doesn’t see anything special about it.

It is one of the good looking charts within the banks. He chose it because it does not have a lot of South American exposure.

Our banks have been laggards this year. There is concern about earnings growth and dividend growth slowing down. Banks are wonderful dividend payers. The issues that are not coming to the table are slow growth and what did he do with their tier 1 capital ratios. You should have a good chunk of your portfolio in banks. (See Top Picks.)

Bank of Nova Scotia (BNS-T) or Bank of Montréal (BMO-T)? Has no preference of one over the other. Characteristics are slightly different. If you have sufficient assets, you should hold both.

He is underweight Canadian banks and has been for a year and a half. There is nothing wrong with it, but he would be cautious against overallocating to it.

The banks really got oversold during the spring and early summer. Once again they came through with another solid quarter. Also, had a couple of dividend increases. This is another area where there are a lot of US short-sellers, and he thinks they just don’t understand the differences in our housing market. This is not his favourite bank, but at this price it is still at a pretty reasonable multiple.

Likes the banks as a group. They are being Shorted which has affected them more than people think. The Shorting is ill-conceived. These are good, solid, economic investments. This has never missed a dividend since 1872, and he expects further dividend increases. Sees the Canadian economy as still growing. Banks are using more electronics, so their margins are going to improve.

(A Top Pick Sept 23/14. Down 5.8%.) All the banks have had a really difficult time except for the CIBC. This is terrific value.

(Reset Preferreds (Y) 33) These are resets, and are not going to be reset until 2020. Yield is about 6%. They have come off since their original issue price, which was June 2015. Nice yield and no reset. Thinks that when the reset does occur it will be at a higher value. This gives you a hedge against rising interest rates. If you didn’t want a reset, an alternative would be iShares DEX Floating Rate (XER-T).