RE:CIX vs Banks I gather from this post and previous posts, that it is your
contention that CIX is a... "far better investment than any bank stock".
Since I own both CIX and two Canadian bank stocks (BMO and BNS), I took the opportunity to compare the three.
1st of all... to address your statement... "unlike the banks not restricted from buyback shares and increase dividends." Banks are NOT restricted from share buybacks and dividend increases. YES, a prohibition was placed on SBs and DIs, but that is a temporary measure and was put in place by the OSFI in March of 2020 to promote stability of the financial system which was being compromised by the Covid19 pandemic.
With vaccinations increasing daily and banks now carrying excessive amounts of capital, I'm pretty sure that a resumption of dividend hikes will be forthcoming in the very near future... and quite possibly a windfall of a "special dividend" could be declared. Actually, because capital levels are now at record highs, the banks are in great shape, so I would suggest that the resumption of dividend growth and buybacks are in the works before yearend, especially if the OSFI begins to relax restrictions by the end of this month or early July. It is worthy to note that banks in the US have passed the "stress test" and resgtrictions are being eased there.
Another reason to be optimistic about the banks is rising interest rates. Banks benefit from higher net interest margins by borrowing money from you and I via our deposits at ultralow rates while lending them out to long-term borrowers at much higher rates.
In another positive sign... the banks had very strong first-quarter earnings... they posted results that far exceeded expectations... I think 2nd quarter will even be better.
In terms of CIX and the banks as an investment... I purchased all three stocks in March/April of 2020. The price then and now and the percentage gain in share price is as follows:
* BMO @ $69.56 ... now at $128.76 ... 85% gain approx.
* BNS @ $52.84 ... now at $80.91 ... 53% gain approx.
* CIX @ 15.60 ... now at $23.16 ... 48% gain approx.
And, in terms of 2020 dividend yield, BMO and BNS have yielded 4.24% and 4.45% respectively. CIX, on the other hand has yielded 3.11% So, both share price and dividend yield has proven superior with the bank stocks.
I'm not sure how much, if any, CIX will increase it's next dividend... the annual was $1.18 in 2018 and $0.72 for 2019 and 2020... a significant drop. On the other hand, the annual for BMO was $3.78/2018, $4.06/2019 and $4.24/2020 while BNS was $3.28/2018, $3.49/2019 and $3.60/2020.
I will submit that the consideration of the rise of deadlier, more contagious variants of the coronavirus is on my mind but given what has already transpired, I don't see that changing the potential of either of the above mentioned stocks in a significant manner. OSFI appears to be waiting for clear signs that the pandemic and the economic instability that it has caused has eased a little more before removing restrictions on dividend increases and/or share buybacks by the banks... that could possibilly take us into late August.
Having said that, it's my humble opinion that the banks will increase their dividend as soon as the OSFi gives the green light. I think an increase of about 6% will be the norm and I'm also looking for that "special dividend" windfall.
So, my take is that the banks... in my case anyway... are an awesome investment. Of course, I like CIX as well and will continue to hold.
Cheers to you Sir!