Intro
We all know the banking industry in Canada is a great investment. They are all very safe investments you can keep in your portfolio for a very long time, even hold it during your entire life. They have a steady growth through acquisition and they also provide a nice dividend, which adds up quickly to your return if you reinvest them. But which one of the big 5 banks in Canada will provide you the best return in the upcoming years? Lets take a look at some key metrics: 10 years returns on your invesments, revenue growth and dividend growth.
The 5 five banks in Canada are CIBC, TD, Royal Bank, BMO and Scotia. Let’s go back in time and look at some of the numbers to compare them.
10 years returns
First, let’s say you would have invested 10 000$ 10 years ago in each of them. Which banks would of provide you the best return? The result you are about to see is actually with dividend reinvested in the stock. If you would have not reinvested the dividend, the return would be 2000$ – 3000$ less, depending on which banks you invested. Here are the results:
10 years returns on 10 000$ invested
As you can see, TD is leading the way with a total of 31 998$. In 10 years, you would of more than triple your investment. Of course this includes the reinvested divdends, as they play a major parts of the total returns. In last place, we got bank of Nova Scotia, which would of have »only » double your investments. Which is not bad, for a very safe investment. Many stock do not double your money and will cause you headache because the are too volatile.
Revenue Growth
We can also look atthe revenue growth of the last five year. Revenue growth is very important as it state the company is making more money, which means they are still growing company and are making good decisions. Here is the revenue growth percentage of each of the banks through 2013 – 2017. Here are the results:
In this categorie, every bank has a nice growth in their revenue. Through 2013 – 2017, they have all made small to medium acquistions to growth the potential of the company, which is notice when you look at the numbers. BMO has certainly a great increase in their revenue, which is a very good sign.
After looking at the 10 years returns and the revenue growth, we shall have a look at the dividend growth. They are such a huge factor in your total return, that we simply cannot pass on which banks grows is dividends at a faster rate. The faster they increase, the more you will yield on your initial position (Yield on cost). Here are the results:
Conclusion
There is so much more too look at before making the decision to invest into a certain stock
Banks stocks are viewed as slow growing, but as you can see, these are nice returns in only 10 years. These are stocks that you hold for decades. The returns could be even more! The problem is that we cannot come to a conclusion with only this metrics. Another number we could look at is the revenue growth.
Rupy's investment 