Thursday, December 31, 2009

Canadian Banks

What I wanted to do today is compare the Canadian Banks that I follow. What I can categorize is that Insiders are doing a lot of selling. It this selling because our bankers need the money or is this selling due to the fact they lack faith in their banks. This is not clear. Unfortunately, insider selling is not a new problem with our banks. The insiders do not seem to keep stock options granted and they tend to have more options than shares.

None of the banks has raised their dividends in 2009. Part of the reason for this is that they are waiting to see if they will have deal with more new rules from our government. Most analysts feel that dividends will not be raised under the end of this year or early next year.

I have updated my index spreadsheet and I have re-arranged it with the Banks on top. See I have also added in some further information on the banks. In this sub-section, I have looked at items to compare the banks on Buy Signals. If you had noticed, there is a big range of whether analysts feel you should currently buy any of these stocks. Three of the banks have recommendations ranging all the way from Strong Buy to Sell. Obviously, there is a big range of opinion on whether any of these banks should be bought.

The other thing I looked at was what yield you would get on your original investment if you held this stock for 5 or 10 years. The winners on this score are the Royal Bank and the Bank of Nova Scotia. Why I look at this is because I invest for the long term, and a high yield after holding a stock for 5 or 10 years is very desirable from my point of view. Another reason I look at this is because I live off the dividends that I earn.

When you lay out the different ratios and compare the Graham Price to the stock price, the TD bank would appear to be the cheapest. I admit I have only included a few ratios for the CIBC bank, as this is the one bank I do not follow. This might just be the cheapest. I do not follow it as I feel it is the worst run Canadian Bank. I do not think it is a long term stock to hold. However, you can make money on CIBC if you buy it when the stock price is depressed and you sell when it recovers.

If you look at the dividends and their returns, the best banks seem to be the Bank of Nova Scotia and the Royal Bank. I have shares in the Royal Bank and I am quite pleased with the returns I have made on this bank. I am especially pleased with the dividend income.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website at for a list of the stocks for which I have put up spreadsheets. Also, look at other investing notes on my website at

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