With the news of Chinese devaluates its yuan for the nth times sending the dollars even higher and the weak oil prices hurts Canadian multibillion dollars industry to the core. So far this year, the Canadian has decreased interest rate several times. Of course this is to stimulates businesses, but whenever there are winners, then there should be losers (at least for short-term). I’m talking about Canadian Banks.
I bought 10 shares of BNS @ $45.60 added $21.60 to my annual dividend
10 shares of BMO $54.55 added $25.3 to my annual dividend
10 shares of RY @ 57.17 added $23.6 to my annual dividend
10 share of CM @69.17 added $35.2 to my annual dividend
Stock ticker PE Future PE Cash per share
BNS. 10.48. 7.56. 192.21
BMO. 11.57. 7.60. 275.51
RY. 10.64. 8.23. 205.83
CM. 10.34. 7.18. 250.12
They all have payout ratios of 48% that means dividend have room to grow. Cash per share is 4-5x the stock price, so they have plenty of cash to weather the oil storm unlike the 2008-2009 financial crash. I don’t believe the Canadian economy will recover before the US’s economy. I don’t know if these stocks will go down even more, but at 52 week low level, I know I have to pull GE trigger on the buys.
As Candian decrease interest rate even more, the banks will get to borrow money for next to nothing, and intern lending the money out at higher interest rate. As long as nothing fish going on like money laundering, or Subway’s Jerod child pornography scandal, banks will continue to be profitable. No doubt about that.
What’s about you? Are you long or short Canadian Banks? Are you picking a winner or are you creating your own mini-ETFs?