Invest in Canada

The Best Place to Start Investing in Stocks: Canada’s Big 5 Banks

by investor on 29/04/08 at 2:50 pm

Investing in Banks is a great base for stock portfolio investment because of the steady cash flows they offer and there performance consistency. Banks are ‘cash cows’ as they are mature businesses with relatively slow yet consistent growth and produce steady cash flow streams through dividends.

The Key features that must be considered when evaluating Bank Stocks are P/E ratios and Dividend yields; although, many other variables may be considered. Look to the P/E and Dividend yield for entry points and if you think yourself more astute than the market sell when things become too good in your view.

If you buy any of these banks your investment is very likely to beat the market if you hold the investment long enough. This means even if you bought at a market top you can still be profitable over the long run. The best time to buy though is when the market turns its back and beats up the stocks: probably when yields creep up above 4 or 5 %.