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Canadian Banks And Dividends

Updated on June 24, 2012

If you are looking for good returns on your investments, one option to consider is the common stock of major Canadian banks. The major Canadian banks are among the strongest and safest in the world.

Based on current market prices, the annual return on your investment via dividends is as follows:

Royal Bank of Canada 4.39%
Bank of Nova Scotia 4.16%
Bank of Montreal 5.07%
CIBC 4.96%

The stocks of these banks trade on the Toronto Stock Exchange and the New York Stock Exchange.

In addition to the return on your investment via dividends, there is the potential for capital gains. So far this year I have earned dividends and capital gains on Royal Bank of Canada and the Bank of Nova Scotia stocks.

The rates of interest paid on short-term CDs in Canada are between 1% and 2% depending on the term and the institution, and there is no potential for capital gains. Therefore, in my opinion, owning shares in one of the banks mentioned above is a safe and profitable way to go.

Of course, there are places in the world where an investor can earn very attractive interest rates. However, I am not comfortable with having my money invested in a foreign country far from home. Also, having funds in a foreign bank could result in unintended unfavorable tax consequences.

Finally, I urge you to do your own research before investing, and to invest only in what you understand and are comfortable with. And remember that no one can care more about your money than you.


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