Bank Stocks and ETFs in July, 2023

 

Starting on the 2nd half of 2023 being July, it's another quarterly "ex-dividend" month for some of Canada's top banks. TD, Royal Bank and BMO come to mind. Their stocks are currently undervalued while the Bank of Canada continues to play their higher interest rate cards. Stopping at a 5% interest rate for 2023? Nobody knows.

The inflation factor is falling and below 4% currently they say but if anything, I'm paying more for goods as the months past so somethings amiss.

Doing some quick math when focusing on dividends, I can bring in more cash dividends by buying an equal amount of certain finance focused, high yield ETFs that pay monthly but adds up to more over a quarter or 3 months than what the Banks payout to shareholders. 

However, the trade off is: By buying individual Bank stocks, there are no management fees and dividends will probably continue to increase over the years plus there's also growth to consider with the bank stocks over time. 

I say "probably" with the dividends but more than likely to increase. With ETFs there are management fees and depending on the ETF, there are some high yield dividends available for those that have a taste for additional risk. 

There are several but BMO's ZWB.TO comes to mind. Hold all the top banks plus ZEB (Equal Weight Banks ETF) with a 7.70% yield and pays a monthly cash dividend. 

I prefer to buy individual stocks to hold long term but it all depends on an investor's budget when it comes to the more expensive stocks in the market place.

 

Fortis and The Big Banks in Focus

 

As I grow my stock portfolio, I also keep track of the current BTSX portfolio on Matt's Dividend Strategy site. I own all the stocks listed along with the new addition, Fortis (FTS) ... a St. John's, Newfoundland utility company spread throughout North America and beyond.

Fortis has a current dividend of  $2.26 (4.08% yearly yield). The stock is up 3.49% so far this year.

The BTSX strategy is to buy the 10 stocks listed at the start of a year and sell at the end however I keep the list for long term until a see a reason to sell one or more. 

Looking it over currently, I can see higher than normal dividend yields. High in the 6 and 7% where prices for most of these stocks are down in price from previous highs. Market sentiment as investors watch what's going on and sell/buy accordingly. Interest rate hikes again in this month of June, 2023 by the Bank of Canada, oil prices, company financial reports/news, etc. all weigh in on that daily sentiment. 

July will be interesting where most of the top banks in Canada have ex-dividend dates and there's currently a lot of buzz about them having to shuffle more of their huge quarterly profits to back some possible/expected mortgage/loan defaults as per Canada's banking rules where interest rates increased once again. 

They have done this in the past with the cycles of high and low interest rates through the years but with some major bank collapses in the US recently, it's making investors nervous.