There are a number of possible approaches to investing in Canada. One is to buy the market as a whole, investing in the Canadian market exchange-traded fund, the iShare MSCI Canada Index ETF (NYSE: EWC).� This ETF has a Price/Earnings (P/E) ratio of 14 and a dividend yield of 1.6%, so the Canadian market overall is reasonably priced.
Back in October 2008, during the worst of the financial crisis, the World Economic Forum rated Canada's banking system as the safest in the world.
So it makes sense that a second possible approach is to buy one of the five large Canadian banks, where - because of better regulation - Canada has a clear competitive advantage over the United States. Of these five, I like the Toronto-Dominion Bank (NYSE: TD) the best. Toronto-Dominion shares are trading at 14 times earnings, with a nice dividend yield of 3.3%. Its Price/Book Value (P/BV) ratio is a reasonable 1.8, while its P/E actually drops to 10.6 on projected 2011 earnings."
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