A new report from CIBC Wood Gundy says that the Canadian banks can be a good place to hide in a tumultuous market.

“The best antidote to market volatility is a focus on financially-solid companies that can provide superior rates of return over the long term, from a combination of capital appreciation and dividend stream,” it says, noting that recent research by its banking analyst, Quentin Broad, concludes that the banks can continue to deliver investor returns.

“The premise was to focus on equities with powerful track records of mid-teen returns on equity, reasonable current valuations, consistent dividend payouts, and future prospects that appear no worse than the past. It was felt that the best way to predict the outcomes for the next 10 years would be to observe the experience of the past 30 years, on the assumption that the future will not deviate materially from a range of historical returns. The big five Canadian banks fit this profile.”

“While there are a number of fundamental reasons why future returns on equity in the Canadian banking sector may be superior to those reported in the past, Mr. Broad’s analysis simply used the past to create sign posts to guide investors in what is to come. The point is this: over the past 30 years, bank investors have enjoyed compelling returns. It is our expectation that the bounty will persist.”

CIBC notes that two primary areas of downside risk were identified: the valuation multiple applied to the sale price might not be achievable, and, the forecast returns on equity may prove unattainable. Nevertheless, its top picks are TD Bank and Bank of Nova Scotia.

Also, CIBC World Markets’ U.S. large-cap regional banking analyst Peter Winter believes that a steadily improving economy, coupled with a gradual increase in interest rates, represents a favourable backdrop for the bank group, and particularly for banks with a Midwestern focus. His top large-cap regional bank picks remain Comerica, KeyCorp and U.S. Bancorp.