3 WAYS TO INVEST IN THE BIG 6 CANADIAN BANKS | DIVIDEND LEGENDS: RBC, TD, BMO, CIBC ETC|15%YIELD?!
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- เผยแพร่เมื่อ 20 ก.ค. 2024
- #investing #etfs #CanadianBanks #dividends #splitcorp
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If there's one thing most people agree on, it's that Banks are some of the most powerful, greedy, and lucrative corporations of all time.So you have 2 choices,
1 - You can either be mad because the bank charges you interest on your mortgage, credit cards or other debt, not to mention bank account fees
2 - You can buy the bank and join the party so you too can earn interest instead of paying it.
Love them or hate them, if you live in Canada, there's a really strong chance you're a customer of one of Canada’s big 6 Banks.
I'm making this video now, because it's the best opportunity in over 10 years...since the 2008-2009 recession to invest in the Banks as they are trading at huge discounts due to the COVID-19 impact on the Economy. In fact they have already recovered substantially since the March crash but the window definitely isn't closed yet to get a great deal as they are still heavily discounted.
Banks don’t perform as well when interest rates go lower, Because interest is how they make most of their money. Therefore when the economy is in a bad state, it's a good time to invest in banks.
On average between the 6 , the banks have been around for 155 years
I don’t want to spend much time trying to convince you that investing in these Banks is a good idea - if you actually need convincing at this point, you probably don’t know how the world works.
So how can an average person like me and you buy a piece of the 6 Banks? Well it's pretty simple. Since they are public corporations, you need to buy shares of the banks, which is essentially giving you part ownership.
So which stocks do you buy? Do you buy all 6 evenly? Do you just get Royal Bank of Canada because it's the biggest one right now? There are countless youtube videos and articles about this question with everyone having different thoughts and opinions. Let's go through the 3 ways first and then ill share my strategy with you.
1 - Buy shares of some, or all of the 6 Banks (buying the individual stocks)
What are the advantages of this method...
Well first of all you own the individual stocks yourself, so there are no fees to pay. If you would own an ETF let’s say that has the 6 banks you would pay a management fees like all other ETFs
Another advantage is that you're guaranteed to participate in the growth of the dividend. What do i mean by that?
Avg Yield of 6 banks : 5.58% as of July 8th
2 - Method number two is buying ETFs that have all 6 Banks.
The advantage of this method is simplicity and safety
You don’t need to worry about which banks to buy or not buy since you get exposure to all 6 by investing in one stock. The ETF manager will decide that
Also, it lowers your risk in case one bank does poorly.
Another advantage is that you can generate more dividend income than owning the banks individually as ETF managers can use different strategies to boost the dividend income. Using a covered call strategy, which i have been talking a lot about in my recent videos is a common method.
Let’s check out my 2 favorite Covered call ETFs that invest in the Big 6 banks so you can see for yourself.
So the third and final method , and this is the one where you can currently get a 15% Annual Dividend, is investing in a Split Share fund that invests in the 6 banks. So what is a Split Share fund?
Essentially , A Split Share fund is an Investment Corporation with its own stock symbol listed on the TSX just like an ETF that typically holds Dividend Paying stocks and they use strategies like Covered Calls and Leverage to boost the Dividend Yield you get on top of the Dividends the banks provide.. It's called a Split, because there are 2 classes of shares. Preferred and Regular.
The Preferred shares are not really interesting or worth looking at in my opinion as they give a fixed dividend payment every quarter, which is how Preferred shares work in general.
It's the regular Shares, sometimes called Class A shares that are worth looking at.
The Class A shares are funded by any left over dividend income, once the Preferred Shareholders are paid, as well as all the Income from Covered calls capital gains and capital appreciation, all of which are enhanced by Leverage.
Leverage is the key point that differentiates a Covered Call ETF from a Split Share fund..
3 Ways to Invest In the BIG 6 Canadian Banks| Method # 1 Buy Individual Stock 3:08 | Method # 2 Buy ETFs 5:22| Method # 3 Buy Split Corps at 15% Yield! 7:56
great video, you're literally a genius for finding the SBC tactic
great video ... love CAD banks currently long on TD & BNS
Thanks!
I have to thank you again for the platform you provide. I've taken your approach and I am on my way to replacing my earned income with passive income! Please keep up amazing work and keep informing us fellow canadians of what can be possible with passive investing! 🙏
the yield is quite incredible for such a tightly regulated segment - i do think a blended etf is the best way to manage outliers and also take advantage of the yields :)
To each their own!
I have to say, you offer the best advice and picks I have seen in a long time. Some i would have never considered. Thanks!
I appreciate that!
Good luck Dennis
Nice video, Adrian! Happy to see a fellow 🇮🇹🇨🇦!
Thank you!
Wealth simple has sbcv and sbcm on aequitas neo exchange. Which one is correct?
Great info!! Thank u.
Glad it was helpful!
I have TD which i will continue to invest in but the covered call etf's look interesting, really nice dividend!
Of course Damian!
There is nothing wrong with investing in a stock individually, but you take on more risk if that company goes bad (i am definitely not worried about TD though :)
Personally, i prefer higher income generating options, Like Covered Call ETFs and Split Share funds etc. More income, with better diversification and less risk
All very interesting. A new way of investing for me. Keep those videos coming. Great job.
Glad you like them!
Ooooh yeah great info
great video, no bullshit, direct to the points of interest.
Thanks man !
Yeah great info
Amazing content love this channel. You do good research 👊 🤛
Thank you!
GREAT content 👍 Thank you for sharing. How can you say no to 15% monthly dividends??
It's the best to compliment a portfolio and increase passive income!
You can when the share crashes to 9$
Hi Adrian! I never tough someday investing in covered call product, since i fellow you i discovered those product that i love To have, you explanation are always clear ! Thanks à bunch for all.
thanks for all the info
You're very welcome!
You are a genius! Thanks for sharing.
I have a question. If I have a Dividend payment entering my account every month from a foreign Delaware, do I need to claim taxes again once payment goes into my bank account or am I ok since the Delaware already paid them off before it entered my account? I'm not sure if it needs to be done again by me after they do it. I don't want my bank account to get flagged for big amounts of money coming in from the dividend payment. please help
Interesting. Couple of questions. Dividends on #2, 3 seems great. However, what happens if these management companies go bust? Because really, you arn't actually investing in the banks directly, but in these management firms that may not have the same track record. Also, thoughts on where bank stocks are headed by end of year?
Why would a management company go bust?
All 3 are very reputable and have been around for a long time.
CI Financial (the second one) has been around since 1965
en.wikipedia.org/wiki/CI_Financial
You are investing primarily in the 6 banks, not the management companies and if ever a fund is terminated, you get the current of the fund (NAV) back.
Hope this helps.
@@PassiveIncomeInvesting Alright, thanks. Now, I'm not saying they will with any certainty. It's just that with the recession we are in, I've heard up to 60 percent of businesses could shut down forever. That's pretty harsh and it wouldn't surprise me if many mid caps didn't even survive. Back in 2008, I don't think many people would have thought that Bear Stearns (1923), or Lehman Brothers (1847), would have gone out of business either. But that's what ended up happening. Did all their investors get their money back? Seems unlikely.
Anyways, I don't think the Canadian banking system is even comparable to the American one, but that being said, I myself would take route #1. I still think diversification is very important, but I'd be willing to take a smaller dividend in exchange for more control over my investments. Just my personal opinion and obviously, you are entitled to your's as well.
I respect your opinion wholeheartedly. The fact that different people think differently in terms of risk is exactly why i presented 3 options. But keep in mind those 2 banks were crazy investment banks who sunk themselves by using an enormous amount of leverage and got screwed when the U.S housing bubble burst.
Canadian banks are strictly regulated by law. Even now, U.S. Bank much safer after the new Federal law was passed to de-risk them (Dodd-Frank Wall Street Reform and Consumer Protection Act)
Option #2 is an ETF (ZWB) managed by BMO. So investing in their stock is a lot more risky then investing in a fund they manage that has all the 6 Banks. Wouldn't you agree?
The other ETF, (CIC) is managed by CI Financial, the biggest Investment firm in Canada, so i would sleep well at night for sure
The third option, like i mentioned is the most risky with the highest reward.
Thanks for your intelligent comment, i appreciate it and good luck!
@@PassiveIncomeInvesting As you mentioned, leverage was the key problem with these investment banks, and my main concern with smaller companies is that they won't have the liquidity to remain solvent during this crisis. However, I was unaware that BMO was behind ZWB, or of the sheer size of CIC, even though the capitalization of these particular investment vehicles seem rather small in comparison; I suppose I'd have to do more research. Anyways, my default stance when investing is always to begin from a point of some skepticism, but thank-you for introducing me to other potential investment avenues.
The approach that works best for you and makes you sleep well at night is the the one you should take. I said it in a few videos and will in the future, that there is right or wrong when it comes to investing; the important thing is that you invest. Good luck John!
Hi, Can you buy those funds if you live in the U.S.?
Thank you for providing this information very helpful for young women as well and easily explained
My pleasure Lisa . I need more female viewership😎
Sub'd! I have a question I'm praying you can answer. If I get a dividend providing ETF and do this within my TFSA does this mean that I don't pay income/capital tax on my dividends earnings as well? No one seems to know
Correct! You pay no tax whatsoever on any dividends generated in your TFSA account. Same goes for Capital gains within the TFSA (if you sell a stock that goes up in value)
@@PassiveIncomeInvesting Amazing. Thank you
glad i could help!
Can you hold SBC in a TFSA?
Of course you can !
Hi Adrian, great picks.
I hold many of these stocks you talked about in my TFSA.
SBC, HCAL, HCA, and ZWB These are great stocks for those who want *_Passive Income_* from their TFSA. My TFSA is now up to over $600.00/month and growing. For now, I reinvest all dividends.
You are doing a great job, Adrian.😁
Great job 👏
@@PassiveIncomeInvesting
Adrian, you are doing a great job. Many of my dividend stocks are your recommendations.
Just recently I used your stock portfolio that you offer, for my wife's TFSA. It is going very well and the wife is happy. 😁
I’m glad , but don’t lose focus on what these funds are designed for ! Income! Not capital appreciation 😎
@@PassiveIncomeInvesting
I have two investment accounts.
My TFSA is for Passive Investing.
In my non-registered account, I have stocks for Passive Investing and Capital Gains.
It's been a great ride so far...
But I remove the dividend for living off, what will happen with the pricipal? Does it increase or stay like that?
Say you invested $100,000 and are receiving $1,000 in dividends.
You can do whatever you want with that $1000. And you’ll keep receiving that $1000 as long as you don’t decrease your $100,000 investment or they lower their distribution rate.
Love TD, as they are in the USA now!
Yup! I was in Miami last year and i saw them there
@@PassiveIncomeInvesting ya lmao, I saw them in NYC but they didn't have anywhere on the signs and such the name Toronto Dominon. 😂 Americans are to proud to put Toronto up.
Thanks for nice video. I need one guidance. I am a senior retired canadian. I have been exclusively dealing with RBC and my all investments are in Balanced and Conservative portfolios of Mutual funds which are diving down and I am upset. Whats your suggestion at this point. Thanks.
Get out of mutual funds as quickly as possible 😉 i offer a 1 on 1 coaching session in my website if interested .
Been debating into going into RY for a few weeks. I’m not diverse in the financial sector. But I have yet to do any research yet (I would do it before I actually bought any shares of course) 😅
Why not get exposure to all six banks with a Covered Call ETF :)
Passive Income Investing I’ll have to find one on the NYSE first 😅 the ones mentioned in your video aren’t offered by my brokers. I’m sure there is one. Just maybe a different ticker symbol.
@@ADInvesting can't go wrong with TD :)
I would like you to do more research on high dividend stocks ETFs REIT etc for your USA viewers
i hear you! have you checked out my Top U.S. Listed ETFs video? th-cam.com/video/l-nmH-Tk6p4/w-d-xo.html
Hi Adrian great video and yes I own all 5 major bank thanks to you! Adrian I was wondering is there a way for us common investors to invest in company before they went public. I read Obama changed the law in US so it is possible although companies still prefer the old way which is understandable but can us Canadians invest in either Canadian or American startups if possible with less than 5000 dollars. Thank you and love your channel.
Hi There,
Unfortunately i don't have much knowledge on investing in Start Ups. Its not something i would ever do, too risky. Id rather invest in companies that are already listed on the stock market and have been around and paying dividends for years. But hey, i wish you luck
@@PassiveIncomeInvesting Thanks man for the info, i do want to see how it works but one website rejected me as they want me to have 1 million dollars in total net worth. Oh i will still follow the path of dividend stocks for sure but i just wanna try lol. Thanks for the info!
Sounds like a scam to me dude! Stay away from that trash, better to invest in ETFs and Blue Chip stocks
@@PassiveIncomeInvesting I think you're right dude. Unless I know someone big shot Angel investor it's hard to invest in proper startup. Thanks man., I will focus on Blue chips and ETFs. By the way I bought ZWC and ZWK after your advice and I'm already 5 percent up on both, so thanks man.
When buying the individual bank stocks do I purchase US.NYSE or Canada Toronto?
What country do you live in ?
Canada 🇨🇦
There’s your answer 😎
Owned cibc for a while and now the stock has split 2 for one...
Great Video! Thanks for the info still learning.
The split share one seems too good to be true..
It's not...When in doubt, look at the dividend payout history. Got to find the balance 😁
So here is the deal. I'm deciding what to buy next. Do you think its bad if I hold Scotiabank BMO and RBC? Should I diversify? I hold other stocks but if I do this majority of my portfolio will be banks and I'm worried about that
are those eligible dividends ?
If you buy the Individual shares, YES 100% Eligible as they are Canadian Corporations of course.
If you buy the ETFs, a portion will be eligible dividends, the rest "Return of Capital" which is actually taxed less than Dividends, so a really good choice if you ask me.
Hello amazing video! so much insight thank you so much!
Has anyone ever invested with BMO and have any comments on doing so? Would love to know them! :D
I’ve used the bmo platform , it’s decent
Do you still think SBC is a good buy?
Looks like my portfolio will be 50% covered call American etfs and 50% Split Share Canadian Etfs
50% split shares seems high to me , but if it makes sense for you , go for it !!
@@PassiveIncomeInvesting would consist of SBC, ENS, and deciding between RS or IDR for Canadian ETFS
@@PassiveIncomeInvesting i do want to make ZWC my primary Canadian Bank ETF...but i don’t like my dividend pay dates being scattered all over the month...would prefer all the dividend pay dates being the same 1-2 days a month instead of 3 different days a month (15th & 30th) or (3rd & 30th)...still deciding
Hi Adrian. Your video is very helpful to us. Unfortunately. The SBC etf has a huge decrease recently. Meanwhile, the Canadian banks stock didn’t drop down that much. Could you give us an analysis of why this etf is going away from its target stock. Thanks a lot.
I understand your concern, but rest assured if your simply buying SBC to collect the dividends (which is what it was meant for) you have nothing to worry about. Also, it's not technically an ETF, it's a Split Share Corporation Fund.
SBC is now at 8.70$ and it was at about 9.50$ a month ago. This seems perfectly accurate to me because the 6 big banks have recently taken a small hit. Don't forget that Split Share funds use Leverage like i explain in details in my Split Share fund video:
th-cam.com/video/rdlNpPsipTU/w-d-xo.html
This means that if the stocks within the fund (in this case, the 6 big banks) go lower. The impact on SBC will be a bit more severe. The current "UNIT NAV" of SBC is currently 18.11$ Anything over 15$ means the monthly dividend is safe.
You can see that on the SBC homepage:
www.bromptongroup.com/product/brompton-split-banc-corp/
Now is actually a great time to pick up SBC, you would lock in a dividend Yield of 13.79%!!
Well most of these banks are owned by the vanguard group so it really doesn’t matter what u do with you money they all shaft u in the end and the vanguard-group own / have the highest shares in most of the world’s countries
What are you even saying ?
The yield has fell to 8.19% as of today.
For sbc , yup that’s true ! It’s because financials have recovered big time post COVID crash
I prefer to get the full benefit from the dividend tax credit - especially now when most bank stocks are north of 4.5% yield
within a registered account it doesn't make a difference
@@raccoon874 - agreed - but in my case , I have a cash account - because I don't like the restrictions on the TFSAs or RRSPs /
So I have a great benefit from the dividend tax credit
@@shirleycrosner634 I'm curious as to what you perceive as a restriction with TFSA (aside amount limit).
@@raccoon874 - continual penalties for over contributing / most folks can not maintain a balanced approach
@@shirleycrosner634 True, it's not hard to keep track of though.. Plus, you know, the TAX FREE aspect of it ain't bad!
Another big dip coming soon to a World near you, no? Good time to buy..
Another Speculation ! 😎
@@PassiveIncomeInvesting lol that's why I'm asking, homie. Appreciate your content, thank you
I chose to join the party instead of complaining about it.
Don’t buy banks until the interest rate cycle is well under way.
*CIC* daily volume is comatose