Last week I added to my large position in TD Bank (TD) at $41 per share. Even though TD made up a large proportion of my portfolio (about 8%), I thought the valuation level was too hard to resist. TD is the best retail Canadian bank and they derive a large portion of their earnings from Canadian retail banking. I also believe that TD's dividend is not at risk of being cut. The bank is currently yielding about 6% as of writing this.
An investment in TD or Royal Bank (RY) is similar to an investment in the Canadian economy, since these banks have a large, stable market share and derive a large proportion of their earnings from economic activity in Canada. I feel confident making this long term investment while we are visiting very low valuations due to the current credit crunch and recessionary outlook.
My three investments in TD Bank over the last year were made at $65, $55, and this recent tranche at $41 per share putting my average cost base (ACB) at about $56/share.
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