Which Is The Best Canadian Bank?

Jun. 26, 2015 9:52 PM ETBMO, TD, BNS, CM, RY, BMO:CA, TD:CA, RY:CA, CM:CA, BNS:CA28 Comments
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The Dividend Guy


  • Canadian banks have outperformed the stock market over the past 15 years.
  • They show a very solid dividend growth history.
  • Considering the economic slowdown, oil price slump, and Canadian housing situation, there are still good opportunities to be enjoyed investing in Canadian banks.

The financial industry in Canada is fascinating; banks were long time blamed for not taking enough risk and for a lack of interesting returns for investors regardless of their steady dividend payouts. This was prior to 2008. Then they showed the world that Canadian banking laws were made for their own good and had protected the market from greed. While financial sectors across the world were collapsing, Canadian banks showed their strength of balance sheet and the six biggest banks even posted profits during this turmoil.

Now that these clouds are long gone, a new storm is approaching the Canadian market. The oil price slump has pushed the economy close to recession territory, the Bank of Canada dropped its rate accordingly and banks have smaller margins to play with. Canadians are keeping up their high levels of indebtedness and the housing market is overheating. Are Canadian banks still a must in your portfolio? If you are to buy one today, which one is the best pick considering all uncertainties?

Here's an overview of the 5 biggest banks in Canada:

TD Bank (TD)

Source: Ycharts

Based out of Toronto, Ontario, Canada, TD is becoming increasingly multi-national. The four main divisions of the company are Canadian Personal and Commercial Banking, Wealth management, Wholesale Banking (securities), and U.S. Personal and Commercial Banking. TD has about $1 trillion dollars in assets under management (Source: TD Investor Relations).

On top of being a leader in Canada, TD is also the most productive Canadian Bank (e.g., more earnings relative to its risk-weighted assets). Its earnings volatility is lower than its peers due to less exposure to capital markets. Finally, TD has deployed a very lean structure into its branches which benefit greatly from their expansion in Quebec and the US. TD Bank is now known as "America's Most Convenient Bank." TD has recently beat analysts' estimates

This article was written by

The Dividend Guy profile picture
My name is Mike and I’m the author of The Dividend Guy Blog & The Dividend Monk along with the owner and portfolio manager here at Dividend Stocks Rock (DSR). I earned my bachelor degree in finance-marketing, own a CFP title along with an MBA in financial services. Besides being a passionate investor, I’m also happily married with three beautiful children. I started my online venture to educate people about investing and to be able to spend more time with my family. I started my career in the financial industry back in 2003. I earned several promotions along with a good pile of diplomas. I had lots of fun working with clients in private banking for half a decade, but thought I could do more with my life. In 2016, I decided to take a leap of faith and left everything behind to travel across North America and Central America with my family. We drove through nine countries and stayed three months in Costa Rica before returning home. This was an eye-opening adventure that led me in 2017 to quit my job in the financial industry and pursue my dream; helping others with their personal finance through my investing websites. You just found the reason why I quit my suit & tie job!

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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