TD Bank, the bank of the Blue Jays, was fittingly hitting lead off this Canadian bank earnings season. The Blue Jays are off to one of their worst starts in a decade. TD beat estimates for earnings and revenues. Did TD hit it out of the park? The rest of the Canadian banks step up to the plate next week. We’ll be keeping score on Cut The Crap Investing.
TD bank stock has been in a terrible slump thanks to the money laundering probe of its U.S. operations. But the bank came through in the quarterly report.
Revenue was up 11.5% year over year. Canadian banking, wealth management, wholesale banking performance was very stong, while (not surprisingly) the U.S. operations dropped the ball. All said, the bank put up surprisingly strong numbers. We’ll see if the other Canadian banks will feed off of that momentum.
The Canadian Banking Season Schedule
We heard from Scotiabank on Tuesday. The numbers are for year over year.
- Revenue up 5.5%
- Adjusted earnings were flat
Skips the normally-scheduled dividend increase.
BMO and National Bank on Wednesday.
BMO year over year
- Adjusted profit down 7%
- Revenues up 2%
National Bank of Canada year over year
- Revenue up 12.4%
- Adjusted earnings up 8.5%
CIBC and RBC on Thursday.
RBC year over year
- Revenue was up 11.5%
- Adjust net income up 11%
- Adjusted earnings up 9%
CIBC year over year
- Revenue up 8.1%
- Adjusted earnings up 3.1%
Royal Bank of Canada (RBC) has caught the attention of the market makers and has been an outperformer in recent months. That is the King of Canadian banking. We’d have to give a gold star to National Bank as well. BMO gets the stinker award for the second quarter running.
Canadian banks are underperforming U.S. banks as a group, and once again it comes back to earnings. The increases in loan loss provisions in Canada are a drag on earnings. Money set aside for potential bad loans is money that can’t be counted toward profits.
The Canadian economy is also struggling and we have the overhang of massive mortgage debts in the rising rate environment. Banks have had to greatly increase provisions for loan losses. That’s cash flow that can’t go towards earnings. And here’s the write-offs.
I hold RBC, TD and Scotiabank. My wife holds most of the banks plus insurers.
CPP investment board wastes our time and money
The Canada Pension Plan Investment Board greatly underperforms their own passive index benchmark.
So of course, they are going to change the benchmark to protect their bonuses and reputations.
Most investors would likely experience the same event. It’s hard to beat a simple and cost effective global ETF portfolio.
You can also ‘get it all’ in one global asset allocation ETF.
You can buy ETFs for free at Questrade
Two weeks ago we looked at how pipeline stocks and utilities were moving in the right direction. Here’s a list of Canadian utilities that are likely to benefit from a lower rate environment.
More Sunday Reads
At My Own Advisor Mark features a story in the Globe & Mail in which a Canadian took a flyer on Shopify and ended up with a $880,000 TFSA. While we’d have to admit that the investor got lucky and took on incredible risk, I’d suggest he at least got the ‘growth thing’ right for the TFSA.
On that event I offered on Twitter …
At that spend rate, the income will not be sustainable. But the investor will discover that before long and will hopefully change course.
We’ll head on over to Banker on Wheels where we’re hedging for WW III. Also in the mix, don’t let a risky portfolio ruin your retirement.
At Dividend Hawk, here’s the week in review. Earnings were still trickling in from companies such as Target, Walgreens and Medical Properties Trust.
Recent GIC hikes at EQ Bank
At stocktrades.ca we have the top Canadian tech stocks for 2024. There is certainly a very solid tech sector in Canada, but it is greatly underrepresented in the Canadian stock index.
Alimentation Couche-Tard is down double digits, should I sell? asks Mike The Dividend Guy.
No business increases its profits in a straight line … I see strong three- and five-year growth trends for dividend triangle metrics. In my opinion, it’s still a good pick for my portfolio. I’ll sleep well at night, and I won’t bother looking at the stock price every day.
Mike The Dividend Guy
Couche-Tard has greatly beat the market over the longer term. That is a pick or honourary Canadian Wide Moat Portfolio constituent.
Something new for retirement
At The Retirement Manifesto, Fritz says retirement is the time to experiment. Those who follow that blog know that Fritz and his wife have created and planned a very fruitful retirement full of new experiences and now a new experiment. Always a thoughtful read as Fritz more often writes on retirement lifestyle over the financial numbers.
At Tawcan Bob offers his April dividend and portfolio report. Of course, Bob acknowledges that share price appreciation is also important …
While living off dividends is our goal, it doesn’t mean we will not touch our principal.
Selling shares allows us to maximize income in retirement. But we then need to manage that sequence of returns risk.
Here’s why retirees hold bonds, cash and GICs.
In retirement, portfolio success comes down to shareholder total return …
and the risk / draw down level. There is no added protection from dividends or special income products.
That graphic is from this post from Financial Freedom is a Journey. From that blog you’ll discover that the former Canadian banking executive (and early retiree) is wisely choosing total return (more growth) over income and also owns much more by way of U.S. stocks vs Canadian stocks.
He retired in May 2016 at the age of 56 after a 34 year career in the Canadian banking industry. His wife retired in 2015 at the age of 52.
I have been an equity investor for just under 4 decades and created this blog after observing the extent to which people treat investing like a casino. Through my writings, I hope to help readers make wise investment decisions.
Financial Freedom blog
At Findependence Hub there was a host of posts this week from spotting good dividend ETFs, considering the Canadian home bias, and how much do you need to invest to become a millionaire.
And here’s the big haul from DD …
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Make your cash work a lot harder at EQ Bank. RRSP and TFSA account savings rates are at 2.5% and 3.0%. You’ll find some higher rates on GICs up to 5.35%. They also offer U.S. dollar accounts. We use EQ Bank, they have been awesome.
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You seem to miss Oaken and Motive when it comes to high interest savings and GICs.
Hi Arthur, there is a link in this ‘Putting your cash to work’ post that covers the top options for savings accounts and GICs in Canada. The link is a great resource.
https://cutthecrapinvesting.com/2023/10/08/putting-your-cash-to-work-as-big-canadian-dividends-suffer-on-the-sunday-reads/