Personal Finance, Stock Market Series

TD Bank vs. Other Four Big Banks? Which bank(s) to invest in?

First of all, I would like to thank all the people who are following and reading my blog.   I am shocked because I just started this blog recently.  I appreciate you guys love my content.

Let’s get back to the topic.

We now know TD Bank (TSX:TD) is a good company to invest in due to its long-term competitive advantage.  But what about the other four big banks in Canada? Let’s find out!

Bank of Nova Scotia (TSX:BNS)

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Scotia Bank is definitely another bank to own in your portfolio because the bank has a higher return on equity, higher earnings per share, and spends less money on depreciation expense.  Although the bank spends a lot of interest expense, it is decreasing in a yearly basis.   Lastly, the current P/E/ ratio is 12.40.

As of today, the stock price is 78.00.  If I were to buy this stock today with $8800, I would make an annual return of 4% from dividends (which is even more than TD Bank).

Royal Bank of Canada (TSX:RY)

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Personally, I would not put Royal Bank as my top 3 Canadian banks to own mainly because the bank uses over 30% of its profit in selling, general and administrative expenses.  If the bank has the most retained earnings out of TD Bank and Scotia Bank, why don’t they use that money to invest in technology to decrease the payroll?  I guess that was why the bank cut 450 jobs a month ago.

Bank of Montreal (TSX:BMO)

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Again, the huge spending on selling, general, adminstrative expenses make me have second throughs on owning Bank of Montreal (BMO).   If I were to choose, I would choose Royal Bank over BMO because Royal Bank is decreasing its payroll on a yearly basis.   Whereas BMO’s spending on payroll is very consistent yearly.

Canadian Imperial Bank of Commerce (TSX: CM)

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Despite Canadian Imperial Bank of Commerce (CIBC) has the highest stock price compared to the other four big Canadian banks, and spends a lot of its profits on selling, general and adminstrative expenses, CIBC is my top 3.

Out of all the big Canadian banks, CIBC has the highest return of equity and earnings per share.  In addition, the bank has the lowest P/E ratio of 9.02.  Ultimately, I would get the highest annual return from dividends of 4.6% if I invest $8800 right now.

So here you are! I have more companies I want to explore and I will post my analysis later on. But if you guys want me to evaluate a company you are interested or you just want to write me something, feel free to leave a comment below.

Catch you on the flip side!

4 thoughts on “TD Bank vs. Other Four Big Banks? Which bank(s) to invest in?”

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