Wednesday, January 22, 2014

Canadian Bank Stocks

I am just doing my annual review of Canadian Bank Stocks. One reason to invest in these stocks is that generally the dividends are good and the dividend growth is good. I know over the past 5 years the dividend growth has not been good on banks, but there is no reason to assume that they will not resume their historical dividend and dividend growth combination.

A reason to investment in dividend growth stock is that you can grow a nice portfolio with increasing dividend income. It takes a while, but if after 10 years you are earnings says 10% on your original stock investment, I think you are doing very well. In any investment climate, a return of 10% is great.

The banks I hold are Bank of Montreal (TSX-BMO), Royal Bank of Canada (TSX-RY) and Toronto-Dominion Bank (TSX-TD). I also cover the Bank of Nova Scotia (TSX-BNX) another bank I like, but you cannot buy everything that is good. I do not cover CIBC (TSX-CM) as I have no desire to every buy this stock. I cover one smaller bank of National Bank of Canada (TSX-NA) and will cover that shortly.

I have held Bank of Montreal (TSX-BMO) for 31 years and I am earning 42.6% yield on my original purchase price. I have held Royal Bank of Canada (TSX-RY) for 19 years and I am earning 36.9% on my original purchase price. I have held Toronto-Dominion Bank (TSX-TD) for 14 years and I am earning 14.6% on my original purchase price.

Of course the past does not guaranteed what the future might hold, however, I do think that our Canadian banks will continue to produce good dividends and good dividend growth.

In a past report I had looked at I looked at what the current increases were and their current yields and then looked at what I was getting on my stock investments. Of course, neither one may actually show what may happen in the future. See my spreadsheethere and read my original Dividend Yields on Original Investments blog entry. This is why you buy dividend growth stocks if you want to grow dividend income.

I reviewed some of the stocks I hold of Alimentation Couche-Tard Inc. (TSX-ATD.B); BCE Inc. (TSX-BCE); Bank of Montreal (TSX-BMO); Royal Bank (TSX-RY); Saputo Inc. (TSX-SAP); SNC-Lavelin (TSX-SNC); RioCan Real Estate (TSX-REI.UN).

On my other blog I am today writing about Enghouse Systems Ltd (TSX-ESL, OTC-EGHSF)... continue...

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 site for an index to these blog entries and for stocks followed. Follow me on Twitter.

1 comment:

  1. Which is the right bank to work with? I'll call it the Bank! To go too.