The big Canadian banks reported quarterly earnings this week, and they mostly did not disappoint. Thanks to the reopening of provinces and fewer COVID restrictions we are making some progress on the economic front and many see less risk in the banking sector. The banks are removing monies from their rainy day funds. Those amounts can then show up to boost profits. Retail banking and wealth management has been strong. That said, the risks remain with a heavily indebted consumer. Provincial and Federal governments are no slouch in that department as well. The big Canadian banks go big on the Sunday Reads.
On Morningstar Canada, Ruth Saldanha offered that Canadian bank reports were good. That is a very solid topline summary.
Canadian bank earnings was also the lead topic in my MoneySense weekly column.
Recovering from the pandemic
In that post Mike from Dividend Stocks Rock did some research by request and offered some tables that compared the recent quarter to the (pre-pandemic) third quarter of 2019. You’ll see that the banks have recovered and then some.
Prevailing weakness was found in Scotiabank thanks to their International operations. TD bank languished thanks to their considerable U.S. operations. Standouts perhaps appear to be a value play such as CIBC. For 2021 you’ll find CIBC in that Beat The TSX Portfolio.
You’ll also find Scotiabank in the BTSX offering the greater yield from the group. We’ll see if that delivers on the value front in 2021 with stock price appreciation.
Of course Mike continues to like National Bank. He’s ‘been right’ about that one for quite some time.
RBC continues to be the Canadian jewel perhaps. From the Morningstar post …
Wide-moat-rated Royal Bank of Canada reported solid fiscal third-quarter earnings. Adjusted earnings per share were $3, solid year-over-year growth compared with $2.23 in the same period a year ago and higher than last quarter’s $2.79.
Here’s a great tweet on the yields and total return projections for Canadian banks.
And more on the share price performance for banks and other financials.
Burnsco is a great resource and don’t forget to (as well) follow me on Twitter.
The banks are in fair value territory. And of course they still offer very generous dividends in a low yield world. From the time this post went live on Million Dollar Journey (in the Summer of 2020) the banks have a sizable beat of the market.
Here’s investing in Canadian banks.
And on the banking and income front, BMO has lowered some ETF fees in a meaningful way.
September is the cruelest month for stocks
September has been the worst month of the year for the S&P 500, (paywall) with the benchmark index falling an average of 0.56% since 1945, the cap-weighted S&P has advanced only 45% of the time in September, the lowest rate of any month. .
That said the numbers can change when stocks have momentum on their side. From that Globe link ( a Reuters reprint) …
The S&P 500 notched its 52nd record closing high of the year on Friday and has gained 20% so far in 2021, having gone 287 calendar days without a pullback of 5% or more.
That type of performance has signalled comparatively strong returns in the past. The index has gone on to deliver a median gain of 5.2% for the rest of the year during years when it made 30 or more new highs through August, according to data from LPL Financial. That compares with a median gain of 3.6% for all years, the firm’s data showed.
More Sunday Reads
On My Own Advisor Mark offers his weekend reads and the cashflow edition.
Jonathan Chevreau was a guest and is flying the findependence flag on the everyday millionaire podcast. In the post link Jonathan offers …
Personally, being more comfortable with clicks than bricks, our family has strived for investing roughly 10% of our financial assets in REITs, or Real Estate Investment Trusts. But as I confess to Patrick, that doesn’t mean I don’t feel a twinge of regret for not taking the plunge into investment real estate. As they say, hindsight is 20/20.
Given that we live in Toronto, I like to call our home the accidental investment. I feel no need or desire to become a landlord. We don’t need the headaches or exposure.
On tawcan Bob offers some wonderful pics that shows what ‘they’ve been up to this Summer’, plus a report on their new portfolio income milestone.
We received a total of 18 dividend paycheques throughout July that added up to $3,270.01, a brand new monthly dividend income record! We not only broke the $3,100 per month milestone but also the $3,200 milestone too! I’m so happy to see that our purchases in the 1H 2021 are finally paying off … our seven-month dividend income average up to $2,619.06
On A Wealth of Common Sense, a very good look at a very good year for the U.S. stock market. And what is more incredible than the 20% gain year to date, is the fact that volatility has almost disappeared.
Here’s a great post on Million Dollar Journey as Kyle Provost offers insights on life, teaching, saving and investing on his 1-year anniversary – as an expat in Qatar.
What a great experience.
Need that economics fix?
And it’s been a few weeks since we checked in on one of our favourite economists. John Mauldin offers the perfect storm. That said, this week’s Jackson Hole meeting was a big dud …
This week is the Fed’s Jackson Hole retreat—again virtual this year, but still an important policy decision point. Powell’s Friday morning speech was basically a nonevent. He did signal the initial taper could begin this year if all goes well. The speech was uber-dovish overall. Is the Fed really going to take its foot off the gas when Congress may ensure Fed support is needed more than ever? Hard to believe.
And on U.S. stimulus …
First, the current cost of the human infrastructure bill is $3.5 trillion. Kind of, sort of. Rather than the normal 10-year projections, they are projecting some of the spending for five years since it theoretically could expire. If you project those same programs out over 10 years, the bill’s cost grows to well over $5 trillion. As Milton Friedman so wittily observed, “There is nothing so permanent as a temporary government program.”
Taxpayers in the U.S. are also wondering how they are going to pay for it all. In that post you’ll also see that nasty ‘stagflation’ word. 😉
Thanks for reading. We’ll see you in the comment section. Have a great Sunday.
From the lovely island – P.E.I.
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