RE:RE:RE:RE:RE:RE:X Day TODAY MAY 22ndnewcoin wrote: So, do we all agree that ALA should be sold and BMO/BNS should be purchased? Would you rather hold a CDN bank long term or ALA? I'm confused, tough choice.
Why hold one or the other? Why not hold both?
Personnally, I prefer ALA to the CDN banks. Why?
1. Lower risk in the short/med term... its utilities will perform even in a downturn while the banks will struggle and might have to issue prefs.
2. Cashflow payout of ALA is lower than CDN Banks pre-COVID. ALA's payout of 30-35% is favourable to BNS and CM's which are closer to 55%. Principal/interest deferrals for the banks and a raise in credit losses will worsen the payout for banks for the next 6 months to two years.
3. Clearer growth profile... ALA has large investments in its utilities portfolio which have guaranteed returns. The CDN banks organical growth will be quite a bit lower for the next year or two.
I still like the banks on a long term basis, but in the current turmoil I believe Altagas will deliver stronger results.