Big five banks keep getting bigger

We regularly point out that it pays to buy the big five Canadian banks. They remain buys for long-term price gains as well as high and rising dividends.

All five earned more in the year to October 31, 2014. Bank of Montreal (TSX—BMO; NYSE–BMO), or BMO, earned $6.41 a share. Bank of Nova Scotia (TSX—BNS; NYSE—BNS), or Scotiabank, earned $5.71 a share. Canadian Imperial Bank of Commerce (TSX—CM; NYSE—CM), or CIBC, earned $8.95 a share. Royal Bank of Canada (TSX—RY; NYSE—RY), or Royal, earned $6.14 a share. And Toronto-Dominion Bank (TSX—TD; NYSE—TD), or TD, earned $4.28 a share.

All of the big five are expected to earn more money this year and next. BMO is expected to earn $6.93 a share this year and $7.43 a share next year. Scotiabank is expected to earn $5.80 a share this year and $6.26 a share next year. CIBC is expected to earn $9.35 a share this year and $9.92 a share next year. Royal is expected to earn $6.53 a share this year and $7.02 a share next year. And TD is expected to earn $4.55 a share this year and $4.92 a share next year.

As we often note, in the long run it’s company earnings and their direction that set stock prices. So rising earnings per share bode well for the shares of the big five banks. In addition, growing earnings per share give the banks the means to keep raising your dividends. They already pay attractive dividends.

The big five banks are also well diversified. They operate across Canada and, except for CIBC, abroad. The oil bust hurts Alberta’s economy, of course. But it’s likely to help Ontario’s economy. It keeps more money in consumers’ pockets and a lower loonie helps exports. The banks are also diversified across many businesses—the banking, brokerage, trust company and insurance industries.

In short, the big five banks remain buys for long-term share price gains as well as high and rising dividends.

 

The Investment Reporter, MPL Communications Inc.
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