This is our first post outlining our investment strategy for the Canadian Financial Sector.
Canadian Bank Stocks with national and international exposure tend to:
- Have good yields that increase on a regular basis
- Provide an opportunity for capital growth
Where appropriate for clients’ risk tolerance and objectives, we buy Canadian Banks with national and international exposure when “on sale”.
Research & Analysis
1) Canadian Bank Yields
Since every client has different objectives and needs, we provide an example of an unnamed bank for our analysis. Canadian banks typically have a good record of dividend and price gains. Though some provide better opportunities than others depending on the circumstance. We are more than happy to discuss if this investment strategy meets your individual needs.
The chart below provides insight into dividend yield and price history of a major Canadian bank over the last 10 years. Notice how the mean dividend yield is approximately 3.7% and is fairly consistent. Yields above that long-term average provide an excellent opportunity to buy.
Medium-term Investment Strategy
- BUY Canadian banks with low exposure to Alberta (and other commodity dependent economies) and higher exposure to retail banking in Canada and in the US when “on sale” (yields are above long-term averages).
Triggers for Strategy Change
- Changes to the Canadian banking system (not expected)
- Exposure to commodity based economies changes materially
- Exposure to retail banking changes materially
- Exposure to U.S. changes materially
Type: Investment Strategy Thesis
Area(s) of Analysis: Canadian Bank Dividends