Banks are the aircraft carriers of the economy. Big strategic must not get hurt too badly. If they’re OK you’re in the game sort of. If they get hurt you’re dead meat. Check out the difference between four major US Banks and the big five Canadian Banks. In all cases the PE ratio are attractively valued and the dividend yield is superior. check out these stat:
Bank PE Dividend %
C 12.59 0.10
JPM 12.16 2.80
WFC 11.20 2.80
BAC 21.96 0.30
TD 13.10 3.60
RY 12.16 3.90
CM 10.24 4.40
BNS 12.01 3.90
BMO 10.98 4.10
George Gutowski writes from a Caveat Emptor Perspective.
Bank of Montreal Head office, at 129 Saint-Jacques Street, in Montreal. Built in 1845 based on plans by John Wells. Español: Sede social del Banco de Montreal Deutsch: Die Bank of Montreal in Montreal, Quebec, Kanada. (Photo credit: Wikipedia)
Big Five Canadian Banks all reported last week with improved earnings and increased dividends. TD Bank (NYSE:TD), Royal Bank (NYSE:RY), BNS (NYSE:BNS), CIBC (NYSE:CM), Bank of Montreal (NYSE:BMO)
So now you have improved dividend yields and a market that will not bite. There can be several reasons for this.
- The anticipation was so great the price had already been bid up. Maybe yes Maybe no
- The market is still wary of financial institutions and does not believe anything they say. Less maybe and more probably.
- Dividend investors do not have rapid fire reflexes normally found on trading desks. They accumulate more slowly. Check
- Canadian investors have about as much exposure as they want to Canadian banks and do not want or need more. Check again.
- American and International investors do not have Canadian banks on the radar and are just missing a good deal. It’s happened before.
The Canadian bank dividends were all popped on the same go.They will all tell you they are not a cartel. While this can be debated Canadian Banks certainly know on what side their bread is buttered. For a Canadian Bank usually on both sides. In the meantime watch for the Investor Relations machines to crank up for Canadian Banks.
George Gutowski writes from a caveat emptor perspective. Follow him on twitter @financialskepti