.floatimg-left-hort { float:left; } .floatimg-left-caption-hort { float:left; margin-bottom:10px; width:300px; margin-right:10px; clear:left;} .floatimg-left-vert { float:left; margin-top:10px; margin-right:15px; width:200px;} .floatimg-left-caption-vert { float:left; margin-right:10px; margin-bottom:10px; font-size: 12px; width:200px;} .floatimg-right-hort { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 300px;} .floatimg-right-caption-hort { float:left; margin-right:10px; margin-bottom:10px; width: 300px; font-size: 12px; } .floatimg-right-vert { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 200px;} .floatimg-right-caption-vert { float:left; margin-right:10px; margin-bottom:10px; width: 200px; font-size: 12px; } .floatimgright-sidebar { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 200px; border-top-style: double; border-top-color: black; border-bottom-style: double; border-bottom-color: black;} .floatimgright-sidebar p { line-height: 115%; text-indent: 10px; } .floatimgright-sidebar h4 { font-variant:small-caps; } .pullquote { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 150px; background: url(http://www.dmbusinessdaily.com/DAILY/editorial/extras/closequote.gif) no-repeat bottom right !important ; line-height: 150%; font-size: 125%; border-top: 1px solid; border-bottom: 1px solid;} .floatvidleft { float:left; margin-bottom:10px; width:325px; margin-right:10px; clear:left;} .floatvidright { float:right; margin-bottom:10px; width:325px; margin-right:10px; clear:left;} Dear Mr. Berko:

Dear E.S.:

I seldom recommend foreign stocks, because I’m not comfortable investing in countries whose language I don’t speak, and whose ruling body is more bent than our Congress. Canada is a neighbor, not a foreign country. Mexico is also a neighbor, but it’s a foreign country.

I like the National Bank of Canada (NA.TO-$62.60), which is home ported in Montreal and prints its statements in French as well as in English. Though I am far from a Francophile, I do like the French language, because it seems to have a different word for everything! I’m comfortable investing in Canada, a country with 34 million people and a Parliament that, unlike our Congress, seems immune to graft, corruption and cupidity. The reason for Parliament’s probity (many say) is that few of its members are lawyers.

Canada exports more oil to the United States than any other country in the world, and the loonie (Canadian dollar) is a fairly strong currency. Canada’s economy has not been bludgeoned by the likes of Goldman Sachs, JPMorgan, Merrill Lynch, Fannie Mae, Freddie Mac, a housing crisis, collateralized mortgage obligations, deficits the size of Pluto, plus a health-care and retirement system crippled by abusive claims and billings. So I believe the National Bank of Canada has excellent long-term potential.

NA.TO should continue to maintain sound credit quality. However, loan loss provisions did soar last year due to liquidity problems with asset-backed commercial paper exposure and corporate, credit card and personal loan losses. Still, NA.TO’s negative numbers are better than its peers’ and should improve significantly in 2010, allowing earnings to increase from $4.73 per share last year to perhaps $6 this year. And though the bank’s 13-year run of consecutive dividend increases was abruptly halted in 2009, I’m certain as the morning tide that NA.TO will increase its dividend this year somewhere in the $2.54-$2.62 range.

At the current $62.60 price, shareholders are earning an attractive yield of 4 percent (Canadians get a 35 percent tax credit on that dividend). Because the Canadian economy should continue to recover from the punishment our economy gave it in the past few years, I’m confident NA.TO will continue to raise its dividend annually in the coming years.

National Bank of Canada has 17,000 employees in 445 Canadian locations, plus branches in 20 foreign countries. Unlike Goldman, Merrill, JPMorgan and Bank of America, this bank doesn’t pay its big shots $20 million or $100 million a year in bonuses.

Still, future revenues and profits are expected to grow at an above-average rate for the foreseeable future. Management expects to reduce its long-term debt by 25 percent and increases its $33 book value by 50 percent in the coming four years.

There are no IRA restrictions on legitimately traded foreign securities.

Please address your financial questions to Malcolm Berko, P.O. Box 1416, Boca Raton, Fla. 33429 or e-mail him at malber@adelphia.net. © Copley News Service