In my May 13 post, I disclosed that I had exited The Bank of Montreal (BMO), The Bank of Nova Scotia (BNS), and The Canadian Imperial Bank of Commerce (CM). I am now pleased to report that I have exited The Toronto-Dominion Bank (TD). My only remaining exposure to the Canadian banking sector is The Royal Bank of Canada (RY).
Despite short-term headwinds, the major Canadian banks may be suitable long-term investment for some shareholders (not me); this May 22, 2024 BNNBloomberg article explains what investors can expect from the upcoming Q2 earnings releases from the Canadian banks.
My reasoning for exiting these banks is that I think I can generate far superior total long-term shareholder returns by continuing to focus on high quality US companies.
The vast majority of my investments since ~2010 have been publicly listed US companies such as:
- Visa
- Mastercard
- Berkshire Hathaway
- Standard & Poor
- Moody's
- Apple
- Microsoft
- Danaher
- Lockheed Martin
- Raytheon Technologies
- Intercontinental Exchange
- Nasdaq
- Thermo Fisher Scientific
- Copart
- Intuitive Surgical
- Paychex
- Automatic Data Processing
- CME Group
- HEICO
- Agilent Technologies
- Walmart
- Exxon
- Chevron
Unless I am mistaken, these types of companies are not found in Canada!
I have exited the following Canadian holdings:
- SmartCentres Real Estate Investment Trust
- Enbridge
- BCE
- Emera
- The Bank of Montreal
- The Bank of Nova Scotia
- The Canadian Imperial Bank of Commerce
- The Toronto-Dominion Bank
Changes made in 2024 will change the rankings of my holdings; I intend to perform a follow up to my 2023 Year End FFJ Portfolio Review at the end of June.
Furthermore, my dividend income will drop significantly. I have replaced companies with attractive dividend metrics with companies that either distribute no dividend or which have a very low dividend yield.
Dividend metrics, however, are of little relevance to my investment decisions. My focus is on a company's TOTAL long-term investment return potential. Reinvesting in the company, repurchasing shares, or strategic acquisitions can sometimes be superior to distributing dividends. Once a company becomes know for its attractive dividend distribution policy, investors come to EXPECT dividend growth.
Final Thoughts
I have very little interest in increasing my exposure to Canadian companies and my existing Canadian holdings will likely remain limited to:
- Alimentation Couche-Tard
- The Royal Bank of Canada
- Brookfield Corporation
- Brookfield Asset Management
- Brookfield Infrastructure
- Brookfield Renewable
- Intact Financial
- Canadian National Railway
- Canadian Pacific Kansas City
I wish you much success on your journey to financial freedom!
Note: Please send any feedback, corrections, or questions to [email protected].
Disclosure: I have no exposure to BCE, BMO, CM, BNS, EMA, ENB, SRU.un, and TD.
Disclaimer: I do not know your circumstances and do not provide individualized advice or recommendations. I encourage you to make investment decisions by conducting your research and due diligence. Consult your financial advisor about your specific situation.
I wrote this article myself and it expresses my own opinions. I do not receive compensation for it and have no business relationship with any company mentioned in this article.
